Which of the Following Statements Best Describes the Tax Consequences

question 80

Multiple Choice

Which of the following statements best describes the tax consequences of a section 338 election?

• A) Gain or loss is recognized by the acquired corporation on the deemed sale of its assets and the buyer gets a stepped-up basis in the assets acquired.
• B) Gain or loss is recognized by the acquired corporation on the deemed sale of its assets and the buyer gets a carryover basis in the assets acquired.
• C) Gain or loss is not recognized by the acquired corporation on the deemed sale of its assets and the buyer gets a stepped-up basis in the assets acquired.
• D) Gain or loss is not recognized by the acquired corporation on the deemed sale of its assets and the buyer gets a carryover basis in the assets acquired.

---

Definitions:

Business Operations

All the activities involved in the day-to-day running of a business that directly relate to its producing and delivering its products or services.