Which One of the Following Statements Is Correct

Multiple Choice

Which one of the following statements is correct?

A) The IRS automatically approves acquisitions that are primarily designed to lower federal taxes.
B) The leverage associated with an acquisition increases the tax liability of the acquiring firm.
C) A firm may benefit from an acquisition if it can lower its capital requirements.
D) Firms can always benefit from economies of scale if they increase the size of their firm through acquisitions.
E) If a firm uses its surplus cash to acquire another firm, then the shareholders of the acquiring firm immediately incur a tax liability related to the transaction.