Answered: Todd and Mary own a local store. They…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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Question #28 of 85

Question ID: 1251794

Todd and Mary own a local store. They would like to establish a business plan to ensure it will continue to operate in the event an owner becomes disabled or dies. They do not want to change the structure of their business nor do they want to relinquish any control of the company. Which one of the following statements satisfies Todd and Mary's goals?

A buy-sell agreement would enable the owner to create a market for the business; however, gift tax may be incurred when interests are gifted.

A buy-sell agreement should be used because it assures the owners of a market for their business, while a recapitalization does not.

A buy-sell agreement should be used because it allows the owners to set a desired purchase price in a private agreement that cannot be scrutinized by the IRS.

A buy-sell agreement would allow them to continue operating the company without additional participants, while a recapitalization could decrease their ownership interests.

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