Stepped-up basis

A corporation that acquires the stock of another corporation (the target) in a qualified stock purchase may elect to treat the purchase of the target stock as a purchase of the target’s assets. This election is referred to as a Section 338 election after the tax code provision that allows for the election or as a step-up election after the consequence of a stepped-up basis from the election. Only a corporation or affiliated group of corporations that has made a qualified stock purchase of a target may make a step-up election.

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