A Section 338 is used when parties to the acquisition would like the tax treatment of an asset deal, but the legal structure of a stock deal. This tax treatment is predominantly related to the ability for a buyer to step up the tax basis of assets to fair market value (FMV), as opposed to a typical stock deal, which is on a carryover basis. In turn, this can have a significant positive effect on the purchase price for the seller.
If an acquisition is completed as a Section 338 election, ... [click through for the full article]
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