Sec. 336(e) elections for S corp. targets: Get a step-up without a letter ruling

First among these steps is the deemed asset sale of the target S corporation's (old target's) assets to the purchaser. [...]the seller will seek to negotiate a higher sales price with the buyer to mitigate this tax rate difference. Since the purchase is still legally a stock purchase, this might not be at the forefront of the buyer's and seller's minds, but an agreement on asset values is crucial. Both old target and new target wül be required to file Form 8883, Asset Allocation Statement Under Section 338 (or an appropriate successor form), with their final and initial returns, respectively (Regs. [...]a best practice would be to agree to the asset values in the stock purchase agreement upfront to avoid a disagreement later.