Section 338 H 10

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.

Section 338 h 10. The section 338 h 10 election must be made not later than the 15th day of the 9th month beginning after the month in which the acquisition date occurs. Section 338 h 10 elections are available only for targets who are s corporations or members of an affiliated group of corporations subsidiary a subsidiary sub is a business entity or corporation that is fully owned or partially controlled by another company termed as the parent or holding company. This election applies to acquisitions of corporate subsidiaries or s corporations the election is made jointly by the acquirer and sellers before the deal is consummated and the seller bears any incremental tax cost from the deemed asset sale.

The deemed asset sale for tax purposes increases the. 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. If a section 338 h 10 election is made for t a section 338 election is deemed made for t.

Register for the. A 338 h 10 election allows a buyer of stock of an s. A section 338 h 10 election is irrevocable.

Having said that as part of the negotiation sellers will frequently demand a higher purchase price in response to a 338 h 10 election as additional compensation to offset the additional tax burden they will incur. Ownership is determined by the. 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.

Roger royse will make a presentation on startups in a down economy. 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 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.

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. Legal business and financing strategies. P acquires t stock no section 338 h 10 election.