8023 Instructions for Form 8023

Instructions for Form 8023
(Rev. November 2016)

Department of the Treasury
Internal Revenue Service

Elections Under Section 338 for Corporations Making Qualified Stock Purchases
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments
For the latest information about
developments related to Form 8023 and
its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/form8023.

General Instructions
Purpose of Form

Use Form 8023 to make elections under
section 338 for a corporation (the “target”
corporation) if the purchasing corporation
has made a qualified stock purchase
(QSP) of the target corporation.
If a section 338(g) election is made for
the target, the target is treated for
purposes of Subtitle A of the Code as
having sold all of its assets on the
acquisition date and then as having
purchased the assets as a new
corporation (“new” target) on the day after
the acquisition date. For periods on or
before the acquisition date, the target is
sometimes referred to as the “old” target.
In addition, the target must recognize gain
or loss on the deemed sale of its assets.
If a section 338(h)(10) election is made
for the target, the target generally is
treated as making the deemed sale and
liquidating. The treatment of the target
shareholders generally is consistent with
the sale and liquidation treatment. A
section 338(h)(10) election cannot be
made for a target corporation unless it is
acquired from a selling consolidated
group, a selling affiliate (as defined in
Regulations section 1.338(h)(10)- 1(b)(3)),
or an S corporation shareholder (or
shareholders).

Who Must File

Generally, a purchasing corporation must
file Form 8023 for the target. If a section
338(h)(10) election is made for a target,
Form 8023 must be filed jointly by the
purchasing corporation and the common
parent of the selling consolidated group
(or the selling affiliate or an S corporation
shareholder(s)). If the target is an S
corporation, a section 338(h)(10) election
must be made by all of the shareholders of
the target, including shareholders who do
not sell target stock in the QSP.

When and Where To File

File Form 8023 by the 15th day of the 9th
month after the acquisition date to make a
Nov 01, 2016

section 338 election for the target
corporation. In the case of a Foreign
Purchasing Corporation, see Special
Instructions for Foreign Purchasing
Corporations on page 2. File Form 8023
with the Internal Revenue Service,
Submission Processing Center, P.O. Box
9941, Mail Stop 4912, Ogden, UT 84409.

Elections for Multiple Targets
One Form 8023 (rather than multiple
forms) may be used for targets that meet
these three requirements:
1. Each has the same acquisition
date,
2. Each was a member of the same
affiliated group (defined below)
immediately before the acquisition date,
and
3. Each is a member of the same
affiliated group immediately after the
acquisition date.
All of the information that would be
required for the additional targets if a
separate Form 8023 were filed must be
provided for that target in schedules
attached to the form. If a form is used to
make an election under section 338 for
more than one target, check the box on
line 9. In an attached schedule, provide
the information requested in Sections A-1,
A-2, B, C, and D for each target
corporation other than the one shown in
Section B of the form. In the schedule,
also state which elections are made for
each target (i.e., information
corresponding to lines 6, 7, 8, and 9 of
Section E). Include the appropriate
signature or signature attachment for each
target. See Signature(s) on page 2.
One special instruction applies to
section 338 elections for lower-tiered
targets, whether one or more Forms 8023
are filed to make the elections. If, for
example, P purchases target A, target A
owns target B, and P makes a section 338
election for target A, this results in a
deemed QSP of target B. To make an
election for target B, complete and sign
Form 8023 as if the purchasing
corporation(s) of the directly purchased
target were the purchasing corporation(s)
of the lower-tiered target.

Definitions
A qualified stock purchase (QSP) is the
purchase of at least 80% of the total voting
power and value of the stock of a
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corporation by another corporation during
a 12-month acquisition period. Preferred
stock (as described in section 1504(a)(4))
is not included in computing voting power
or value. See section 338(h)(3) for the
definition of “purchase.”
The acquisition date is the first day on
which a QSP has occurred.
In general, the 12-month acquisition
period is the 12-month period beginning
with the first acquisition by purchase of
stock included in the QSP. See section
338(h)(1) for additional rules. Also see
Regulations section 1.338-8(j)(2).
The term affiliated group means an
affiliated group as defined in section
1504(a), determined without regard to the
exceptions contained in section 1504(b).

Specific Instructions
Employer identification number. An
employer identification number (EIN) must
be included for each corporation identified
in Section A-1, A-2, B, or C or on attached
schedules. An EIN is not required if the
corporation does not have, and is not
otherwise required to have, an EIN.
Country of incorporation. When
identifying the country of incorporation,
include political subdivisions, if any.
Tax year ending. The tax year ending
date of any corporation is determined
without regard to any QSP.

Section A-1—Purchasing
Corporation

If more than one member of an affiliated
group purchases stock of the target
corporation listed in Section B (or
identified on an attached schedule), enter
in Section A-1 the name of the corporation
that acquired the largest percentage (by
value) of the target's stock in the QSP. If
two or more affiliates acquired equal
amounts of target stock, insert the name of
any one of them in Section A-1. On an
attached schedule, provide the
information requested on this form for
each purchasing corporation other than
the one listed in Section A-1. Also provide
a schedule that lists which target stock
was acquired by each purchasing
corporation.

Section A-2—Common
Parent of the Purchasing
Corporation

If the purchasing corporation is a member
of a consolidated group, complete
Section A-2.

Section C—Common
Parent of Selling
Consolidated Group,
Selling Affiliate, S
Corporation Shareholder,
or U.S. Shareholder

If Form 8023 is filed to make a section
338(h)(10) election for a target that is an S
corporation, the information requested in
Section C must be provided for each
shareholder of the S corporation target.
Attach a schedule with respect to the other
shareholders. If Form 8023 is filed to make
a section 338 election for a target that is or
was a controlled foreign corporation
(CFC), enter in Section C the name of the
U.S. shareholder that owned the largest
percentage (by value) of the target's stock
immediately before the acquisition date. If
two or more U.S. shareholders acquired
equal amounts of target stock, enter the
name of any one of them in Section C. On
an attached schedule, provide the
information requested on this form for
each U.S. shareholder other than the one
listed in Section C. If a U.S. shareholder is
a member of a consolidated group other
than the common parent, also provide the
name and EIN for the common parent of
the U.S. shareholder's group.
Line 4b. Identifying number. Enter the
social security number (SSN) for an
individual. Enter the EIN for a corporation.

Section E—Elections
Under Section 338
Line 8. Gain recognition election. If a
gain recognition election is made for a
target, it applies to the purchasing
corporation and all members of its
affiliated group that hold nonrecently
purchased target stock (that is, stock in
the target acquired prior to the 12-month
acquisition period). See Regulations
section 1.338-5(d). If a section 338(h)(10)
election is made for a target, a gain
recognition election is deemed made by
each purchasing group member.
If a gain recognition election is actually
made (not deemed made) for a target
corporation, attach a schedule providing
the target corporation's name and the
name, address, and EIN of each
purchasing group member holding
nonrecently purchased stock. The
schedule must also contain the following
declaration (or a substantially similar

declaration): “EACH CORPORATION
HOLDING STOCK SUBJECT TO THIS
GAIN RECOGNITION ELECTION
AGREES TO REPORT ANY GAIN
UNDER THE GAIN RECOGNITION
ELECTION IN ITS FEDERAL INCOME
TAX RETURN (INCLUDING AN
AMENDED RETURN, IF NECESSARY)
FOR THE TAX YEAR IN WHICH THE
ACQUISITION DATE OF THE TARGET
OCCURS.”
The schedule must be signed on behalf
of each purchasing group member holding
nonrecently purchased target stock by a
person who states under penalties of
perjury that he or she is authorized to act
on behalf of the corporation.
A gain recognition election for the
target also applies to any target affiliate
that has the same acquisition date as the
target and for which a section 338 election
is made. Attach a schedule with the
information requested above for each
such target affiliate.

Signature(s)

If the common parent of a consolidated
group is the agent of the purchasing
corporation under Regulations section
1.1502-77, the person authorized to sign
the statement of section 338 election is
the person authorized to act on behalf of
that common parent.
If a QSP of a target corporation is made
by two or more corporations that are
members of the same affiliated (but not
consolidated) group, Form 8023 must be
signed by a person authorized to sign on
behalf of each corporation.
If a section 338(h)(10) election is made
for an S corporation, Form 8023 must be
signed by each S corporation shareholder
regardless of whether the shareholder
sells his interest in target stock in the QSP.
If multiple signatures are required, the
signatures must be provided on a
“SIGNATURE ATTACHMENT” to the form
under the appropriate “declaration under
penalties of perjury” (this is the statement
that appears on Form 8023 immediately
above the relevant signature line). Write
“See attached” in the signature area of the
Form 8023.

Special Instructions for
Foreign Purchasing
Corporations

Unless otherwise specifically noted, the
general rules and requirements in these
instructions apply to foreign purchasing
corporations.
Who must file. Generally, the purchasing
corporation must file Form 8023.
However, the U.S. shareholders of
controlled foreign purchasing corporations
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described in Regulations section
1.338-2(e)(3) may make the section 338
election for the purchasing corporation.
The shareholders may make this election
only if the purchasing corporation is not
required under Regulations section
1.6012-2(g) to file a U.S. income tax return
for the tax year that includes the
acquisition date.
To make this election, complete Form
8023 and attach a statement to the form
showing the name, address, identifying
number, country in which organized, and
stock interest of each U.S. shareholder.
The statement must be signed by each
U.S. shareholder. When signing the
statement, each U.S. shareholder must
state under penalties of perjury that the
stock interest for that shareholder
specified in the statement is correct. Write
“See attached” in the signature area of
Form 8023.
As an alternative to a jointly signed
statement, the shareholder signatures
may be shown on separate statements
attached to Form 8023. If a U.S.
shareholder is not an individual or does
not have delegated authority to sign the
statement, the person signing must state
under penalties of perjury that he or she is
authorized to sign the statement for the
U.S. shareholder. File Form 8023 for the
foreign purchasing corporation's tax year
that includes the acquisition date.
Form 8883. Each U.S. shareholder must
also file Form 8883, Asset Allocation
Statement Under Section 338, with Form
5471, Information Return of U.S. Persons
With Respect to Certain Foreign
Corporations. See the Instructions for
Form 8883.
When to file. Special rules may apply to
foreign purchasing corporations. The time
during which a qualifying foreign
purchasing corporation may make a
section 338 election for a qualifying
foreign target is described in Regulations
section 1.338-2(e)(1).

Special Instructions for Foreign
Targets
Unless otherwise specifically noted, the
general rules and requirements in these
instructions apply to foreign targets.

A section 338 election will not be valid
for a target that is a controlled foreign
corporation, a passive foreign investment
company, or a foreign personal holding
company unless affected U.S. persons
who own stock in these targets are
notified, in writing, as set forth in
Regulations section 1.338-2(e)(4).
Form 8883. Each U.S. shareholder must
also file Form 8883 with Form 5471. See
the Instructions for Form 8883.
Attachments. Attach a schedule listing
the date of each purchase of foreign target

stock, each purchaser's name, the
percentage purchased by each purchaser,
and the name and place of incorporation
of any selling entities. If affected U.S.
persons owning stock in the target are
notified, attach a schedule containing the
name and EIN or SSN of each U.S.
person.
Form 8883. Each U.S. shareholder must
also file Form 8883 with Form 5471. See
the Instructions for Form 8883.
Attachments. Attach a schedule listing
the date of each purchase of foreign target
stock, each purchaser's name, the
percentage purchased by each purchaser,
and the name and place of incorporation
of any selling entities. If affected U.S.
persons owning stock in the target are
notified, attach a schedule containing the
name and EIN or SSN of each U.S.
person.

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