A Parent Corporation Must Make the § 338 Election by the Fifteenth

question 7

True/False

A parent corporation must make the § 338 election by the fifteenth day of the third month following the close of the tax year in which a qualified stock purchase occurs.

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Definitions:

Debt-to-Equity Ratio

A financial measure reflecting the mix of equity and debt financing used to support a company's assets.

Acid-test Ratio

A stringent indicator of a company's short-term liquidity, measuring its ability to cover short-term liabilities with its most liquid assets, excluding inventory.

Working Capital

A financial metric representing the operational liquidity available to a business, calculated as current assets minus current liabilities.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if the stock is undervalued or overvalued.