During the current year, Goldfinch Corporation purchased 100% of the stock of Dove Corporation and made a qualified election under § 338. Which of the following statements is incorrect with respect to the § 338 election?

Question

Quizplus · Accepted Answer

The statement "Goldfinch is treated as having bought all of Dove's assets on the qualified stock purchase date" is incorrect. Under a § 338 election, the purchasing corporation is treated as if it had purchased the target corporation's assets at their fair market value on the acquisition date, while the target corporation is treated as if it had sold its assets at their fair market value on the acquisition date. However, the target corporation continues to exist as a separate entity, and its historical tax attributes, such as net operating losses and tax credits, are not lost.

During the Current Year, Goldfinch Corporation Purchased 100% of the Stock