Section 336(e) Elections: Tax Basis Step-Up Through Deemed Asset Sale Treatment

Structuring Qualifying Stock Dispositions for Partnership and Private Equity Acquirers and for Taxable Spinoffs

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


Conducted on Thursday, November 12, 2020

Recorded event now available

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Course Materials

This CLE/CPE course will provide tax advisors with a thorough and practical guide to utilizing a Section 336(e) step-up election in the disposition of a target corporation. The panel will contrast the Section 336(e) election with the election available under Section 338(h)(10), outline the requirements for qualification, and detail the considerations involved in making the election.

Description

The Section 336(e) election is a tax planning tool increasingly used in corporate acquisitions and spinoffs. It allows acquirers of a corporation to achieve a step-up in the tax basis of the target company's assets. Similar to the more well-known Section 338(h)(10) election, the Section 336(e) election allows equivalent tax consequences across a wide spectrum of transaction structures for which the Section 338(h)(10) election is not available.

A Section 336(e) election permits a "qualified stock disposition" to be treated as a disposition of the target’s assets. Unlike the election under Section 338(h)(10), which is only available where a corporation is the acquiror, a Section 336(e) election is useful for partnership acquirors (such as private equity funds) and individual acquirors, and is useful for taxable spinoff transactions. Also, stock dispositions may be aggregated over 12 months rather than in a single disposition to a single purchaser.

Tax advisors must consider critical differences in the elections when structuring any transaction to qualify for Section 336(e) treatment. Our panel will provide tax professionals with a thorough and practical guide to utilizing a Section 336(e) step-up election in the acquisition of a target corporation. The panel will contrast the Section 336(e) election with Section 338(h)(10) treatment, outline the requirements for availability, and detail the considerations involved in making the election.

Listen as our experienced panel provides a thorough and practical guide to the opportunities, consequences, and drafting requirements in structuring a transaction to qualify for a Section 336(e) election.

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Outline

  1. The basic operation of the Section 336(e) election
  2. Considerations for the Seller
  3. Considerations for the Purchasers
  4. Requirements for Availability
  5. Role of the Section 336(e) election in two-party M&A transactions
  6. Role of the Section 336(e) election in spinoffs and RMTs

Benefits

The panel will review these and other high priority issues:

  • What is a "qualified stock disposition" for purposes of Section 336(e) and how does it differ from a “qualified stock purchase” for purposes of Section 338(h)(10)?
  • Under what circumstances may a Section 336(e) election be made in connection with a stock distribution?
  • What are the documentation requirements for a valid Section 336(e) election?
  • What should sellers and purchasers consider before making or permitting a Section 336(e) election?

Faculty

Mathieu, Kate
Kate L. Mathieu

Attorney
Skadden Arps Slate Meagher & Flom

Ms. Mathieu advises public and private companies on a broad range of U.S. federal income tax matters, with a particular...  |  Read More

Schockett, Paul
Paul Schockett

Partner
Skadden Arps Slate Meagher & Flom

Mr. Schockett advises public and private companies on a broad range of U.S. federal income tax matters, with...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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