CCH Learning Center

Description:
A corporation making a qualifying stock purchase has the option to make a federal Section 338 election. This means that the purchase of a controlling interest in the target's stock is treated as if it were an asset purchase, which means the target recognizes gain or loss on the fictional asset sale, and the acquirer takes a basis in the target's assets equal to the purchase price of the stock plus the liabilities assumed (i.e., market value). Section 338 reflects the judicial principle that the purchase of a target corporation's stock in order to obtain the target's assets should be treated as a single transaction involving the acquirer's acquisition of the target's assets.

This course reviews the requirements and consequences of a federal Section 338 election, and how that election is treated by the states.

Upon completing this course, the professional will be able to:

• Explain the significance of a federal Section 338 election
• Differentiate between the federal Section 338(g) and Section 338(h)(10) elections
• Describe the state tax treatment of Section 338(g) and Section 338(h)(10) elections