alleryStart learning →A new company assumes a loan above asset basis less accrued liabilities. Result for owners?
ANo tax arises at all
BTax on entire business
CTaxable gain on excess
DLoss claimed on excess
Answer & Solution
Correct answer: C. Taxable gain on excess
Where assumed debt exceeds the basis of assets net of accrued liabilities, the owners recognise taxable gain for that excess.
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