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From the perspective of the parent corporation, contrast the tax consequences of a subsidiary liquidation under the general nonrecognition rules with a subsidiary liquidation that follows a § 338 election.

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Answer:

Section 338 allows the corporation to purchase stock and retain the basis of assets. It also allows adjusting the basis for the assets. Under section 338 the, if the corporation sold its assets, the transactions related to sale will be subjected to double tax. Whereas, if the corporation cause liquidation for the target asset's and then undergo for a sale is subjected to single tax.  

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