Series 79 practice questionmediumStock vs Asset Purchases
Which of the following is a key tax advantage to the buyer in an asset purchase rather than a stock purchase?
- AThe buyer obtains a step-up in the tax basis of the acquired assets✓ Correct answer
- BThe buyer automatically assumes all of the seller’s liabilities
- CThe transaction is always tax-free to the seller
- DConsents for contract assignments are never required
Explanation
Why A — The buyer obtains a step-up in the tax basis of the acquired assets
Asset purchases often allow buyers to step up the tax basis of acquired assets, enabling future depreciation deductions. Stock purchases usually do not provide this benefit, making the distinction crucial for structuring deals.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 995+ Series 79 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related M&A, Tender Offers & Restructuring questions
- Which SEC rule governs disclosures in going-private transactions involving affiliates of a public company?
- Which of the following events would require an amendment to Schedule TO to be filed 'promptly'?
- If parties to a reportable transaction under HSR submit their filings but begin integrating operations before the…
- A merger agreement contains a right for the initial acquirer to match any unsolicited superior proposal received by the…
- In a private company acquisition with an earnout, what is a common source of post-closing dispute between buyer and…
- According to the all-holders/best-price rule, if a bidder offers a higher price to certain shareholders during a tender…
- Which type of merger is often used by a private company to become publicly traded without a traditional IPO?
- In a management buyout (MBO), what is rollover equity?