Which of the following statements best describes the tax consequences of a §338 election?
A)Gain or loss is recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a stepped-up basis in the assets acquired.
B)Gain or loss is recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a carryover basis in the assets acquired.
C)Gain or loss is not recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a stepped-up basis in the assets acquired.
D)Gain or loss is not recognized by the acquired corporation on the deemed sale of its assets, and the buyer gets a carryover basis in the assets acquired.

Question

Quizplus · Accepted Answer

A §338 election allows the buyer to treat a stock purchase as an asset purchase for tax purposes, resulting in a stepped-up basis in the assets acquired. The acquired corporation recognizes gain or loss on the deemed sale of its assets.

Which of the Following Statements Best Describes the Tax Consequences