Section 338 Election

If p acquires all of the t stock for its value of 1 800 with no section 338 h 10 election under section 1001 a will recognize long term.

Section 338 election. A section 338 h 10 election is jointly made by the purchasing corporation and the common parent of the selling consolidated group or the selling affiliate or s corporation shareholder s. A section 338 h 10 election is much more common than a section 338 g election because the 338 g election results in two levels of tax whereas a 338 h 10 election results in only one. Purchasing corporations use form 8023 to make elections under section 338 for the target corporation if they made a qualified stock purchase qsp of the target.

The amendment made by subparagraph a amending this section shall apply to qualified stock purchases as defined in section 338 d 3 of the 1986 code after march 31 1988 except that in the case of an election under section 338 h 10 of the 1986 code such amendment shall apply to qualified stock purchases as so defined after june. A 338 h 10 election allows a buyer of stock of an s corporation or a corporation within a consolidated group to treat the transaction as an acquisition of 100 of the assets of the target for tax purposes. The acquirer generally bears the incremental tax burden from the gain on the deemed sale of the target s assets.

Section 338 h 10 of the internal revenue code can provide significant tax benefits to a buyer of 80 or more of a target corporation. This election applies to acquisitions of freestanding c corporations the election is made unilaterally by the acquirer after purchasing stock from the target s shareholders. One on the shareholders upon their sale of the target stock and the other on the deemed.

Section 338 h 10 of the internal revenue code can provide significant tax benefits to a buyer of 80 or more of a target corporation. 338 permits a corporation that makes a qualified stock purchase of another corporation to elect to treat such acquisition as an asset rather than a share acquisition for federal tax purposes. P acquires t stock no section 338 h 10 election.

If the target is an s corporation all of the target s shareholders including shareholders who do not sell target stock in the qsp must make the election. Information about form 8023 elections under section 338 for corporations making qualified stock purchases including recent updates related forms and instructions on how to file. Use form 8883 to report information about transactions involving the deemed sale of corporate assets under section 338.

In a regular section 338 election two levels of tax are imposed. This includes information previously reported on form 8023 elections under section 338 for corporations making qualified stock purchases.