S is the common parent of a consolidated group that includes T, and the S group files calendar year consolidated returns. At the close of June 30 of Year 1, P makes a qualified stock purchase of T from S. P makes a section 338 election for T, and T’s deemed asset sale occurs as of the close of T’s acquisition date (June 30).
T is considered disaffiliated for purposes of reporting the deemed sale tax consequences. T is included in the S group’s consolidated return through its acquisition date, except that the tax liability for the deemed sale consequences is reported on a separate deemed sale return of T.
If P instead purchased the stock of T at 10 a.m. on June 30 of Year 1, the results would be the same.
S is the common parent of a consolidated group that includes T and files calendar year consolidated returns.
At the close of June 30, P makes a qualified stock purchase of T from S and makes a section 338 election for T.
The tax liability for the deemed sale consequences is reported on a separate deemed sale return of T, not the consolidated return.
Whether the purchase occurs at the close of June 30 or earlier that day, the deemed asset sale results are the same.
