TAX 9866 Lecture 15: Nuance
Document Summary
They bought the stock from i for 25m (pp). But bc they made 338g election, they have to incur 4. 6m of tax. Nuance under 338g is purchaser gets to treat that tax liability as an increase in purchase price. Ps new purchase price under 338(g) election is = to amount you paid in cash (25m) + liability assumed as a result of doing 338g election (tax liability) 4. 6m= 29. 6m. Relevance: rather than 25m, you get additional 4. 6m of goodwill. 15m of residual purchase price = s197 intangible amortized. Nols were going to go away/expire and corp was going to lose them. Govnt allows 338(g) b/c on paper gov"t is whole and with tvm, come ahead; get 4. 6m in tax today and give it back over 15 years. . 6 corp never gets, but tp uses . 6, corp uses tax attribute and govt ends up giving back 4. 6m over 15 years. All assets used in trade/biz, ordinary loss, capital gain.
