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270. Ramon lives in Mexico City and is a Mexican citizen. He has several friends in the United
States who own shares in an S corporation. Ramon would like to invest in this company. Ramon:
271. Although it is a small company, Zorn Enterprises owns a large number of inexpensive
rental housing units in Texas and Louisiana. Currently, the company is a chartered C corporation,
but the owners are interested in switching to be an S corporation. After consulting a lawyer, they
learned that Zorn Enterprises does not qualify to be designated as an S corporation. Which of the
following characteristics of Zorn Enterprises would prevent it from becoming an S corporation?
272. Emily wants to open a chain of hair styling salons and hopes to attract investors to help
finance growth. She considered forming a C corporation, but wants to have more flexibility about
how the new business will be taxed. She also wants to offer investors/owners limited liability.
Emily can satisfy her objectives by setting up a(n):
273. A few years back, your three U.S. born friends that live in the State of Wyoming inherited
a dude ranch that they plan to turn into a retirement haven for race horses. Peaceful Pastures
wants to open its doors by spring of 2018. After attending several small business seminars, the
three friends are certain they need limited liability. The high-risk, labor-intensive business will
require a sizeable investment including an air-conditioned barn, several fenced-in pastures and
loads of animal feed. You recently heard that one form of business ownership requires owners to
pay self-employment taxes on the entire amount of earnings. You are fairly certain this is one tax
liability your friends would like to avoid. You recommend:
274. Double taxation is experienced by corporations that pay dividends. Which of the following
scenarios is an accurate example of double taxation?
275. Khalid is a 39-year-old married business owner who runs a dry cleaning service with
three locations. His personal obligations are the home that he owns with his wife who works for a
well-known insurance company; the health needs of his family; and his commitment toward
saving for the future higher education needs of his three children. Khalid knows that two of his
locations require a large infusion of cash to pay for new and expensive dry cleaning equipment.
Although his wife's job provides the family with health insurance, it also places the family in a
higher income tax bracket. Khalid would certainly like to minimize his taxes. Which of the
following forms of business ownership would you suggest for Khalid? Khalid should consider:
276. One reason that companies participate in mergers and acquisitions is:
277. A ____________ is two firms combining to form one company.
278. A(n) _________ occurs when one company buys the property and obligations of another
company.
279. Three types of corporate mergers are:
280. A ______________ merger unites firms at different stages of related businesses.
281. When two companies in the same industry agree to become one firm, the result is called
a:
282. When two companies in completely unrelated industries agree to become one firm, the
result is called a:
283. A conglomerate merger will:
284. One result of taking a firm private is:
285. An attempt by employees, management, or a group of investors to purchase an
organization primarily through borrowing is called a(n):
286. If a group of stockholders or management obtain all the stock of a previously publicly
traded firm for themselves, this is referred to as:
287. The difference between a merger and an acquisition is:
288. When two firms which do not participate in the same industries, for example, a software
company and a fast food restaurant company, decide to merge, the result is called a ____________
merger.
289. A merger involving a commercial bakery and a grocery retailer would be an example of a:
290. A merger involving a software producer and a clothing manufacturer is an example of a:
291. In a leveraged buyout, the managers of a firm, its employees, or other investors:
292. When investors successfully
take a firm private
, the firm's stock is:
293. Modern Screen Entertainment, Inc., recently bought Star Power Pictures, Inc., for an
undisclosed amount of money. It now owns all of Star Power Picture's properties and obligations.
This is an example of a(n):
294. Continental Foods is considering a conglomerate merger with a company that makes
storage solutions. A likely reason is:
295. Several years ago, Regis Corporation, a very large hair styling salon company, purchased
60 "Your Father's Mustache" salons. Although this was initially an acquisition, the merging of
these two businesses was a(n) __________. Regis went on to purchase several hair care product
companies. Joining forces with hair care product companies would represent a ___________.
296. The strategy of investors who are attempting a leveraged buyout is to:
297. Foreign investment in U.S. companies continues to be strong. When Belgian-based In-
Bev purchased the largest beer company in the U.S., Anheuser-Busch, this action constituted
a(n) _________________ with a negotiated selling price of $52 billion.
298. Adam is a major stockholder in Precision Transmission Services (PTS), a nationwide
network of transmission repair shops founded by his father. Currently, PTS stock is sold on the
open market, but Adam has talked to several relatives about his desire to get all of the PTS stock
back in his family's hands. Adam is interested in _____________________________.
299. Hidden Valley Communications, Inc., located in a remote area of Utah, made a special
device that was used in LTE phones. After three years of local operations, the company that
employed 4,000 people was planning to close its Utah operation and move the assembly offshore.
Under the direction of a financial services company that financed the deal, the employees agreed
to become owners of the company and continue to operate the business. The business concept
that describes this arrangement is:
300. A(n) ___________ is an arrangement whereby someone with a proven idea for a business
sells the rights to use the business model, to sell a product or service to others in a given
territory.
301. A(n) _____________ is a company that has a proven business model and is willing to sell
the rights to use the business model to others so that they can sell the same product or service
within a given territory.
302. A person who buys the right to use a business name and sell a product within a given
territory is called a:
303. A franchise can be formed:
