In Assessing Whether to Use a § 338 Election, Considerations

question 6

Multiple Choice

In assessing whether to use a § 338 election, considerations include

• A)Tax benefits resulting from the step-up in basis enabled by a § 338 election (e.g., increased depreciation) are deferred.
• B)When part of the basis is assigned to goodwill, no tax benefit is obtained until the acquired business is sold.
• C)Future tax savings being discounted to determine their present value
• D)All of the above

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Definitions:

Economic Profit

The surplus remaining after subtracting total costs, including both explicit and implicit costs, from total revenues, indicating the profitability of a business beyond breaking even.

Self-Interest

Refers to actions that elicit personal benefit or advantage, often guiding economic decision-making and behavior in the context of rational choice theory.

Consumer Sovereignty

The determination by consumers of the types and quantities of goods and services that will be produced with the scarce resources of the economy; consumers’ direction of production through their dollar votes.

Dollar Votes

The “votes” that consumers cast for the production of preferred products when they purchase those products rather than the alternatives that were also available.