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U.S. Code Section 338(h)(10) Election to unilaterally treat certain corporate stock purchases as asset acquisitions

Level 1

Client purchases S-Corporation stock for $1.165M. We wish to use the above referenced IRS Code Section 338(h)(10) to treat the stock purchase as an asset acquisition. The literature is nowhere to be found as to how such a corporate return would be prepared, nor the disclosures which may be necessary to attach to the return. Is it as simple as attaching Form 8023 (to Make an Election under Sec 338) to the form 1120 with the acquired S-Corporations assets listed with a stepped-up basis for depreciation purposes? Inquiring minds need to know, Thx

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2 Comments 2
Level 13

Not at all my area of expertise but do the Regs help?:


Level 15

The election (Form 8023) needs to be attached. Seller has to agree to it. Asset Allocation gets reported on 8883.

Fixed Assets get depreciated at their purchase price.

Receivables and payables purchased have a tax basis so don't double report/deduct on a cash basis tax return.

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