Printer Friendly

Estimated taxes for Sec. 338(h)(10) transactions.

Sec. 338(h)(13) generally provides that, for Sec. 6655 purposes--relating to payment of estimated taxes--the tax attributable to the sale described in Sec. 338(a)(1) (i.e., the asset sale deemed to occur as a result of a Sec. 338 election (including a Sec. 338(h)(10) election)) is not taken into account. Thus, Federal income taxes accruing from the deemed sale of appreciated assets by the "old" target corporation are not taken into account in the quarterly estimated tax calculus.

New Law

AJCA Section 839 amends Sec. 338(h)(13) to provide that it "shall not apply to a qualified stock purchase for which an election is made under [Section 338(h)(10)]."

Effective Date

This amendment applies to transactions occurring after Oct. 22, 2004.

Implications

As described in the Conference Report, if a transaction eligible for the election under Sec. 338(h)(10) occurs, estimated tax would be determined based on the stock sale, unless and until the parties agree to make a Sec. 338(h) (10) election, on which estimated tax consequences would be based on the deemed asset sale.

FROM KIRSTEN SIMPSON, WASHINGTON, DC
COPYRIGHT 2005 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2005, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Author:Simpson, Kirsten
Publication:The Tax Adviser
Date:Jan 1, 2005
Words:190
Previous Article:Affirmation of consolidated return regulation authority.
Next Article:Modified treatment of transfers to creditors in certain divisive reorgs.
Topics:


Related Articles
Planning around the new estimated tax rules.
Sec. 338(h)(10) elections involving S corporation targets.
Avoiding penalties by making timely estimated tax payments.
Planning opportunities for community banks.
State tax implications of the expanded sec. 338(h)(10) election.
Sec. 338(h)(10) elections with S corps.
Sec. 338(h)(10) checklist.
Timely estimated tax payments can be based on late-filed returns.
Sec. 338(h)(10) Temp. Regs. and the step-transaction doctrine.
Safe harbors for identifying Sec. 382 RBIG or RBIL.

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |