Small business tax solutions. (allocation of income in sale of S corporation stock)

IRC section 338 elections allow corporate taxpayers three alternatives in the allocation of income in the sale of all an S corporation's stock to a parent corporation. Since S corporation status will terminate at the close of the sale, treatment of income and loss items must be addressed. The p...

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Bibliographic Details
Published in:Journal of accountancy 1996-02, Vol.181 (2), p.32
Main Author: Jamison, Robert W
Format: Magazinearticle
Language:English
Subjects:
Asset acquisitions
C corporations
Corporate reorganizations
Fair market value
Planning
S corporations
Stockholders
Tax elections
Taxation
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Summary:IRC section 338 elections allow corporate taxpayers three alternatives in the allocation of income in the sale of all an S corporation's stock to a parent corporation. Since S corporation status will terminate at the close of the sale, treatment of income and loss items must be addressed. The purchasing parent can choose to make a section 338(g) election, a section 338(h)(10) election or no election. Under section 338(g), the S corporation is treated as liquidated as of the date of sale. Under section 338(h)(10), the S corporation is treated as having sold all of its assets on the sale date.
ISSN:0021-8448
1945-0729