Peter Faber, in this bylined article, advised practitioners on how states apply an Internal Revenue Code Section 338 election in asset sales. “Even if a state purports to recognize” such an election, Mr. Faber wrote, “there is a potential trap for unwary buyers in situations in which the selling parent and the target file separate state income tax returns … in one or more states. Some states do not allow combined returns under any circumstances, and the ones that do typically do so only if the corporations are engaged in a unitary business.”
