Can AC corporation make a 338 H 10 election?
A Section 338(h)(10) election can be made when one corporation purchases the stock of another corporation, and the election must be made jointly by the buyer and the seller….Tax Geek Tuesday: A Buyer’s Best Friend – Understanding The Section 338(h)(10) Election.
| Tax basis | FMV | |
|---|---|---|
| Cash-basis accounts receivable | $0 | $200 |
Why is a 338 H 10 election?
A section 338(h)(10) election refers to an election under section 338(h)(10) of the federal tax code. If various conditions are met, the election allows the parties in a sale of stock of a corporation to treat the transaction for federal income tax purposes as if it had been structured as an asset sale.
What does Section 338 mean in the tax code?
Section 338 election refers to an election under the federal tax code. The Section 338 election allows firms to treat a stock sale as an asset
How does Section 338 ( G ) apply to acquisitions?
Section 338 (g) Election 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. The acquirer generally bears the incremental tax burden from the gain on the deemed sale of the target’s assets.
What happens when a target company is sold under Section 338?
When the Section 338 election is made, for federal income tax purposes, the sale of target company. equity by the selling shareholders is ignored. Under the Section 338 election, the target company S corporation status remains in effect throughout the deemed sales process.
When to use form 8023 under Section 338?
Purchasing corporations use this form to make elections under section 338 for the target corporation if they made a qualified stock purchase (QSP) of the target corporation.
