IRC § 338(h)(10) Election Strategies for Tax Counsel: Opportunities and Risks Under Tax Reform

Leveraging the Election in Structuring Acquisitions, Dispositions, and Asset and Stock Transfers

Recording of a 90-minute CLE/CPE webinar with Q&A

Conducted on Thursday, March 29, 2018

Recorded event now available

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Program Materials

This CLE/CPE webinar will provide tax counsel with a review of the application, operation and impact of the Section 338(h)(10) election in acquisitions. The panel will provide tax planning strategies to optimize tax benefits and minimize pitfalls in the election under the new tax reform law.


The Section 338(h)(10) election, long available under prior tax law, allows the parties to treat the purchase and sale of the stock of a target corporation as a deemed asset sale. Thus, while the acquisition is structured as a stock sale, the buyer obtains a basis step-up in the acquired assets held by the target. That basis step-up is then available for expensing or depreciation.

The recently enacted tax act ("Act") benefits buyers by making “used” property acquired in an actual or deemed asset acquisition qualified for immediate bonus depreciation expensing. Further, the Act increased the immediate bonus depreciation expensing percentage to 100% of the asset cost (up from 50% under prior law).

For the C corporation seller, any gain upon the deemed asset sale will be subject to the new maximum corporate tax rate of 21%, also a feature of the Act.

Together, these asset expensing and tax rate changes will significantly and favorably affect pricing and deal valuation, particularly in an actual or deemed asset purchase. While the Act has generally triggered increased economic activity, and commensurate merger and acquisition activity, these tax law changes should further accelerate M&A transactions. There will be great interest in structuring these transactions as deemed or actual asset purchases.

Savvy tax counsel must be aware of both the opportunities and potential pitfalls in determining when the Section 338(h)(10) election is appropriate for a particular transaction, especially in light of passage of the Act.

Listen as our authoritative panel of tax practitioners guides you through the mechanisms of the Sect. 338(h)(10) election and the various tax strategies counsel must consider in leveraging the election in light of tax reform.



  1. Overview of §338(h)(10) and tax reform considerations
  2. Typical acquisitions in which the §338(h)(10) election is made
  3. Operation of the election
  4. Avoiding pitfalls


The panel will review these and other key issues:

  • When is a Section 338(h)(10) election appropriate?
  • What opportunities does the election offer and what potential tax pitfalls must counsel consider in making the election?
  • What is the impact of the Section 338(h)(10) election on the Section 197 anti-churning rules?
  • How does the Act affect the viability of the election?
  • How does the election operate in the case of non-corporate buyers and S corporations?
  • How do state tax laws interact with the election?


Phillips, Stephen
Stephen L. Phillips

Senior Partner / CFO
Phillips Golden

Mr. Phillips heads the firm's tax practice and has spent his career as a tax, business, and corporate partner in...  |  Read More

Bridgers, Griffin
Griffin H. Bridgers

Hutchins & Associates

Mr. Bridgers' practice encompasses all areas of private wealth and family business. In addition to estate...  |  Read More

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