The Term Grossed-Up Basis
A)Refers to Adjustment of the Deemed

question 17

Multiple Choice

The term grossed-up basis

• A)Refers to adjustment of the deemed price of a subsidiary corporation for a minority interest when a parent corporation owns less than 100 percent of the subsidiary and elects § 338.
• B)Is obtained by the following formula:
• \[\begin{array} { c }
• \text { Grossed-up } \\
• \text { basis }
• \end{array} = \begin{array} { c }
• \text { Parent corporation's } \\
• \text { basis in subsidiary's } \\
• \text { stock on the acquisition date }
• \end{array} \times \frac { \begin{array} { c }
• \% \text { of subsidiary's } \\
• \text { stock held by parent } \\
• \text { on the acquisition date }
• \end{array} } { 100 \% }\]
• C)Requires that the parent corporation purchase at least 90 percent of the subsidiary's stock (except nonvoting, nonparticipating, preferred stock).
• D)Is described by all of the above.

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