This section explains the Gain Recognition election. This section requests information such as the acquisition date and percentage of target corporation stock that the purchasing corporation acquired. The information is for determining the tax consequences of the QSP for the relevant entities involved in the transaction. It may be a controlled foreign corporation (CFC) or had been a CFC in the preceding five years. Section C is only relevant in specific circumstances, such as when an election has been made or if the target corporation was a consolidated group member. Section C-Common Parent of Selling Consolidated Group, Selling Affiliate, S Corporation Shareholder, or U.S. The IRS uses this information to verify a corporation’s identity and determine its tax impact from a QSP. This section includes information such as the target corporation’s name, address, taxpayer identification number, and the date the QSP was completed. The section requires information about other consolidated group members for the IRS to assess the tax impact of the QSP on the entire group. It is a group of companies filing a consolidated tax return as a single entity for tax purposes. Section A-2 of Form 8023 is required for purchasing corporations that are part of a consolidated group. Section A-2 Common Parent of the Purchasing Corporation If two or more affiliates acquired equal amounts, insert the name of any of them. If multiple members of an affiliated group purchase stock of the target corporation, enter the name of the corporation that acquired the largest percentage of the target’s stock in this section. This section includes the details of the purchasing corporation, such as name and address of the company and its contact information. The form consists of five sections: Section A-1 Purchasing Corporation To file Form 8023, the corporation must provide information about the qualified stock purchase (QSP). Currently, the IRS is accepting completed Forms 8023 via fax until further notice. This allows the corporation to get a better price for the target corporation’s assets.įorm 8023 is used to make this election. In this case, the purchasing corporation must make an election under section 338 of the tax code to have the transaction treated as if the target corporation sold its assets and then liquidated. A private equity firm receives most of a company’s stock to resell it at a profit eventually.A corporation acquires a controlling stake in a joint venture partner’s stock.A large corporation acquires a smaller corporation’s stocks to integrate them into its business operations.Here are a few examples and scenarios where a QSP might occur: Qualified stock purchases involve acquiring certain kinds of stock, including those bought from a company. What is a Qualified Stock Purchase (QSP)?Ī QSP occurs when one corporation buys 80% or more of another corporation’s stock, including voting power and value, within 12 months. Form 8023, also known as the “Elections Under Section 338 for Corporations Making Qualified Stock Purchases” form, was created to help corporations that choose to make a qualified stock purchase (QSP) of another corporation comply with IRS regulations.
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