Irc section 338 sale
Webthe CAT as a gross receipt from the sale of a capital asset. IRC section 338(h)(10) Election . For federal income tax purposes, taxpayer may elect to treat certain stock sales as asset sales. When the taxpayer makes this election pursuant to IRC section 338(h)(10), the sale of the stock of a business is treated as the sale of the business ... WebIf a buyer purchases the stock of the target and a section 338 (h) (10) election were not made, the selling consolidated group would have $60 of tax gain and, after closing, the target would continue to have $50 of inherent gain in …
Irc section 338 sale
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WebThe deemed asset sale treatment may have negative tax consequences that selling shareholders need to consider. By agreeing to make a section 338(h)(10) election, selling shareholders may subject themselves to various federal and state taxes that a straight stock sale — one without a section 338(h)(10) election — would not generate.
WebSection 338 (h) (10) Election Scenario 1 You’ve found a great company whose acquisition you believe would advance your objectives. Its stock is valued at $1.5 million. But then upon discussion with the target company, and you discover that the company’s tax basis in its assets is only $500,000. You’re faced with a new dilemma. WebJun 1, 2024 · Note, however, that a stock sale is unlikely to offer any asset basis step-up unless an election under Sec. 338 or Sec. 336 (e) is allowed. The purchaser often has business reasons for using a holding company to purchase target stock.
WebThis is accomplished by making a special tax election under either IRC Section 338 or 336. As discussed above, a significant driver in favor of asset sale treatment is the expansion of immediate expensing to used assets. To qualify for this deduction, however, the buyer and seller have to be unrelated for tax purposes. WebFor Sec. 338 transactions, the regulations make this determination clear, citing application of general tax principles (Regs. Sec. 1.338-7(e), Example 1 (satisfaction of contingent …
The United States Congress enacted Section 338 in 1982 to allow taxpayers to treat certain qualified stock purchases as asset acquisitions for federal income tax purposes. Section 338 provides two elections: the so-called “regular Section 338 election” under Section 338 (g), and the other under Section 338 … See more 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 … See more An S Corporation is a regular corporation that has 100 shareholders or less, which enables the company to enjoy the benefits of incorporation but be taxed as if it were a partnership. S Corporations typically do not pay taxes and … See more Due to the double imposition of the tax, a regular Section 338 election often is unattractive and typically is made only when the target has significant tax attributes (e.g., net operating losses) to offset the gain … See more If the target is an S corporation and a stock purchase is desired for non-tax reasons, but an asset purchase is desired for tax reasons, it is necessary for the target S corporation’s … See more
WebSection 338 generally allows the purchaser of stock in certain stock transactions to treat the transaction as though the target corporation sold all of its assets for their fair market value immediately after the stock purchase. 3 An election under §338, as opposed to a 338 (h) (10) election, does not impact the tax treatment of the selling … tennis locarnoWebSection 338 (g) Election In the case of a Sec. 338 (g) election, the target recognizes gain on the deemed sale of its assets. This tax impact of this gain is borne by the acquirer. The target is then considered a new corporation with a stepped-up basis in the assets. triage software testingWebI.R.C. § 338 (i) (1) —. regulations to ensure that the purpose of this section to require consistency of treatment of stock and asset sales and purchases may not be … tennis lk campWebTo make a Sec. 338 election, a number of statutory and regulatory limitations must be met, including: The buyer must be a corporation; The buyer must acquire at least 80% of the … triage software developmentWebSection 338 (d) defines a qualified stock purchase as one where the transaction occurs within a 12- month acquisition period and also satisfies the elements of §1504 (a). … tennis live ticker halleWebAbout Form 8883, Asset Allocation Statement Under Section 338 Use Form 8883 to report information about transactions involving the deemed sale of corporate assets under … tennis lobster ball machineWebHowever, when an IRC section 338(h)(10) election is made, the corporation is treated as if it sold its assets, liquidated, and ceased to exist. (Treas. Reg. § 1.338(h)(10)-1(d)(4)(i).) Amarr’s shareholders agreed to treat the sale for income tax purposes as a sale of assets and liquidation of Amarr. 12 triage space