Which of the Following Statements Best Describes the Tax Consequences

question 30

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.The tax benefits from a step-up in basis usually is negated by the immediate tax paid on the deemed sale of assets by the acquired corporation.

---

Definitions:

Charismatic Authority

Is based on a belief in the claims of extraordinary individuals that they are inspired by a god or some higher principle.

Western Political Sociologists

Scholars from Western countries who study the social aspects of politics, including the distribution of power and resources, political behavior, and institutional organization.

Democratic Nations

Countries that operate under a form of government in which the people have the authority to deliberate and decide legislation, or to choose governing officials to do so.

Social Preconditions

Refers to societal factors or conditions that must exist before a particular development or change can occur.