Section 35-3-08-01-102 - State 338 Election:1.Seller elects 338 [338h(10)]. a. Corporations that elect a Section 338 sale of assets for Federal tax purposes must also make a similar election for Mississippi tax purposes. The treatment of the election will be different for Mississippi in that the subsidiary corporation must report any gain as if it distributed assets in liquidation to the parent and the parent will report gain on the disposition of its stock as if the subsidiary is liquidated. The subsidiary will increase the bases of its assets by gain reported. b. Tax paid by the subsidiary on the gain from the increase in basis can be used by the parent as a tax credit to offset tax due on gain from the disposal of the subsidiary's stock. The parent cannot use the tax credit for tax paid on the increase in basis by the subsidiary to offset tax due from any other activity. Additionally, the tax credit cannot be carried forward or refunded.2.Purchaser elects 338. A Corporation that elects a Section 338 Purchase of assets for Federal Tax purposes in which the corporation purchases at least 80% of the stock of another corporation and treats this purchase as a purchase of assets must make a similar election for Mississippi tax purposes. The subsidiary which has been purchased shall report any gain on the increase in the basis of its assets.
35 Miss. Code. R. § 3-08-01-102