Section 338

Basics of section 338.

Section 338. Section 338 g elections are rare because the current tax cost of the deemed asset sale usually exceeds the pv of tax savings from the tax basis step up. C the purchasing corporation within the meaning of section 338 of such code makes not later than november 15 1982 an election under section 338 of such code then the amendments made by this section shall apply to the acquisition of such target corporation. The purchasing corporation within the meaning of section 338 of such code makes not later than november 15 1982 an election under section 338 of such code then the amendments made by this section shall apply to the acquisition of such target corporation.

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. Generally a 338 g election is only advantageous when the target has substantial net operating loss nol or tax credit carryovers that the acquirer can use to offset any taxable gain triggered by the deemed asset sale. 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.