On January 1 of Year 1, P makes a qualified stock purchase of T. On that date, T owns the stock of T1. On March 1 of Year 1, T sells the T1 stock to an unrelated person.
On April 1 of Year 1, P makes a section 338 election for T.
Notwithstanding that the T1 stock was sold on March 1 of Year 1, the section 338 election for T on April 1 of Year 1 results in a qualified stock purchase by T of T1 on January 1 of Year 1.
When P makes a qualified stock purchase of T on January 1, T owns 100 percent of its subsidiary T1.
T sells the T1 stock to an unrelated person on March 1, before P makes the section 338 election.
P makes the section 338 election for T on April 1, after T1 has already been sold.
The election treats T as having made a qualified stock purchase of T1 on January 1, despite the intervening sale.
