Identify which of the following statements is true.

Question

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When the acquiring corporation makes a Sec. 338 election, the target corporation is treated as a new corporation for tax purposes. This allows the acquiring corporation to receive a stepped-up basis in the target corporation's assets, which can result in significant tax savings. Option A is incorrect because tax attributes of the target corporation, such as net operating losses, are actually lost when a Sec. 338 election is made. Option B is incorrect because the new target corporation does not need to adopt the old target corporation's tax year.

Identify Which of the Following Statements Is True