General Instructions

What's New

Final Regulations under section 338 provide details on the effect of the section 338 election on insurance company targets. See Regulations sections 1.338-1(b)(2)(vii) and 1.338-11.

Purpose of Form

Use Form 8883, Asset Allocation Statement Under Section 338, to report information about transactions involving the deemed sale of corporate assets under section 338. This includes information previously reported on Form 8023, Elections Under Section 338 for Corporations Making Qualified Stock Purchases.

Although you use Form 8023 to make an election under section 338, you must also file Form 8883 to supply information relevant to the election. Timely file Form 8023 even if you do not have all the information required to be supplied separately on Form 8883.

If an election is made under section 338 for a qualified purchase of stock of a target corporation, the target corporation (old target) is deemed to sell its assets to a new corporation (new target) at the close of the acquisition date. See Regulations section 1.338-1 for details.

There are two types of section 338 elections. A section 338(g) election is made only by the purchasing corporation. A section 338(h)(10) election is made jointly by both the old target shareholders and the purchasing corporation. Form 8883 must be used to make both types of section 338 elections.

Who Must File

For elections under sections 338(g) and 338(h)(10) both the old target and the new target must file Form 8883.

When and How To File

Generally, attach Form 8883 to the return on which the effects of the section 338 deemed sale and purchase of the target's assets are required to be reported.

Old target (S corporation for a section 338(h)(10) election).   For a section 338(h)(10) election for an S corporation target, attach Form 8883 to Form 1120S, U.S. Income Tax Return for an S Corporation.

Old target (consolidated return).   If the old target is the common parent of a consolidated group, attach Form 8883 to its final consolidated return ending on the acquisition date. If the old target is a member (not the parent) of a selling group that will file a consolidated return and is making a section 338(h)(10) election, attach the form to the selling group's consolidated return for its tax year including the acquisition date.

  However, if an election under section 338(g) is made for the target, attach the form to the old target's deemed sale return; not to the selling group's consolidated return. See Regulations section 1.338-10(a)(2) through (4) for details.

New target.   Attach Form 8883 to the first return of the new target. If, on the day after the acquisition date, the new target is a member of a group filing a consolidated return, attach the form to the consolidated return that includes the day after the acquisition date.

Foreign target.   If a section 338(g) election is made for a foreign target for which Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, must be filed:
  • The seller (or U.S. shareholder) must attach a copy of Form 8883 to the last Form 5471 for the old foreign target.

  • The purchaser (or its U.S. shareholder) must attach a copy of Form 8883 to the first Form 5471 for the new foreign target.

Supplemental Form 8883

If the amount allocated to any asset is increased or decreased after the year in which the sale occurs, any affected party must complete Parts I through IV and VI of Form 8883 and attach the form to the income tax return for the year in which the increase or decrease is taken into account. See the instructions for Part VI and Regulations section 1.338-7 for more information.


If you do not file a correct Form 8883 by the due date of your return and you cannot show reasonable cause, you may be subject to penalties. See sections 6721 through 6724.

Elections for Multiple Targets Under Section 338

Although one Form 8023 (rather than multiple Forms 8023) may be used for targets that

  • each have the same acquisition date

  • were members of the same affiliated group immediately before the acquisition date (defined below), and

  • are members of the same affiliated group (defined below) immediately after the acquisition date, file a separate Form 8883 for each target corporation.


A qualified stock purchase (QSP) is the purchase of stock of at least 80% of the total voting power and value of the stock of a corporation by another corporation during a 12-month period.

A 12-month acquisition period is the 12-month period beginning with the first acquisition by purchase of stock included in the QSP.

The acquisition date is the first date on which a QSP has occurred.

Recently purchased target stock is any stock in the target corporation that is held by the purchasing corporation on the acquisition date and was purchased by the corporation during the 12-month acquisition period. See section 338(h)(1) for special rules for stock acquisitions from related corporations.

An affiliated group is an affiliated group as defined in section 1504(a), determined without regard to the exceptions contained in section 1504(b).

A corporation will be treated as a target affiliate (as defined in section 338(h)(6)) of the target corporation if each corporation was, at any time during much of the consistency period that ends on the acquisition date of the target corporation, a member of an affiliate group which had the same common parent. Except as otherwise provided, a target affiliate does not include a foreign corporation, a DISC, or a corporation to which section 936 applies.

Class I assets are cash and general deposit accounts (including savings and checking accounts) other than certificates of deposit held in banks, savings and loan associations, and other depository institutions.

Class II assets are actively traded personal property within the meaning of section 1092(d)(1) and Regulations section 1.1092(d)-1 (determined without regard to section 1092(d)(3)). In addition, Class II assets include certificates of deposit and foreign currency even if they are not actively traded personal property. Class II assets do not include stock of target affiliates, whether or not actively traded, other than actively traded stock described in section 1504(a)(4). Examples of Class II assets include U.S. government securities and publicly traded stock.

Class III assets are assets that the taxpayer marks-to-market at least annually for federal income tax purposes and debt instruments (including accounts receivable). However, Class III assets do not include (a) debt instruments issued by persons related at the beginning of the day following the acquisition date to the target under section 267(b) or 707; (b) contingent debt instruments subject to Regulations sections 1.1275-4, and 1.483-4, or section 988, unless the instrument is subject to the noncontingent bond method of Regulations section 1.1275-4(b) or is described in Regulations section 1.988-2(b)(2)(i)(B)(2); and (c) debt instruments convertible into the stock of the issuer or other property.

Class IV assets are stock in trade of the taxpayer or other property of a kind that would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business.

Class V assets are all assets other than Class I, II, III, IV, VI, and VII assets.


Furniture and fixtures, buildings, land, vehicles, and equipment, which constitute all or part of a trade or business as defined in Regulations section 1.1060-1(b)(2) are generally Class V assets.

Class VI assets are all section 197 intangibles (as defined in section 197) except goodwill and going concern value. Section 197 intangibles include:

  • Workforce in place;

  • Business books and records, operating systems, or any other information base, process, design, pattern, know-how, formula, or similar item;

  • Any customer-based intangible;

  • Any supplier-based intangible;

  • Any license, permit, or other right granted by a government unit;

  • Any covenant not to compete entered into in connection with the acquisition of an interest in a trade or a business; and

  • Any franchise trademark, or trade name (however, see exception below for certain professional sports franchises).

    The term “section 197 intangible” does not include any of the following:

  • An interest in a corporation, partnership, trust, or estate;

  • Interests under certain financial contracts;

  • Interests in land;

  • Certain computer software;

  • Certain separately acquired interests in films, sound recordings, video tapes, books, or other similar property;

  • Interests under leases of tangible property;

  • Certain separately acquired rights to receive tangible property or services;

  • Certain separately acquired interests in patents or copyrights;

  • Interests under indebtedness;

  • Professional sports franchises acquired before October 23, 2004; and

  • Certain transactions costs.

See section 197(e) for further information.

Class VII assets are goodwill and going concern value (whether or not the goodwill or going concern value qualifies as a section 197 intangible).

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