Pacific Corporation acquires 80% of the stock of Jackson Corporation for $3,000,000 in the current year. Jackson's assets have a basis of $2,000,000 and its liabilities are $800,000. The assets are worth $3,500,000. What gain is recognized by Jackson Corporation on the deemed sale of its assets if a Sec. 338 election is made?

Question

Quizplus · Accepted Answer

The Answer is FMV of $3,500,000 less basis of $2,000,000 equals a recognized gain of $1,500,000.

Pacific Corporation Acquires 80% of the Stock of Jackson Corporation