ExpertMedium1 markMultiple Choice
CPA · Question 59 · Area 4: Entity Tax Planning
Corporation P acquires 100% of the stock of Target T for cash. P wants to treat the stock purchase as an asset purchase to step up the basis of T's assets. Which election should P make?
Corporation P acquires 100% of the stock of Target T for cash. P wants to treat the stock purchase as an asset purchase to step up the basis of T's assets. Which election should P make?
Answer options:
A.
Section 351 election
B.
Section 338(g) or 338(h)(10) election
C.
Section 754 election
D.
Section 1362 election
How to approach this question
1. Identify Goal: Step-up basis in assets after stock purchase.<br/>2. Identify Code Section: IRC §338.<br/>3. Result: Section 338 election.
Full Answer
B.Section 338(g) or 338(h)(10) election✓ Correct
B
A Section 338 election allows a qualified stock purchase to be treated as an asset acquisition for tax purposes.
Common mistakes
Confusing with partnership 754 election.
Practice the full CPA TCP Practice Exam
68 questions · hints · full answers · grading
More questions from this exam
Q01An individual taxpayer, filing single, exercised 1,000 Incentive Stock Options (ISOs) in Year 1 w...HardQ02A taxpayer has the following income and losses for Year 1:<br/>- Salary: $200,000<br/>- Interest ...HardQ03In Year 1, a taxpayer donates a piece of artwork to a public charity (50% limit organization). Th...HardQ04A taxpayer has $10,000 of investment interest expense in Year 1. They have the following income i...MediumQ05A single taxpayer has the following financial profile for Year 1:<br/>- Wages: $180,000<br/>- Net...Medium