Section 39 Qualified Stock Purchase

• Library: Bus Trans 2005

A “qualified stock purchase,” as defined by I.R.C. § 338(d)(3), is a prerequisite to a valid I.R.C. § 338 election. A qualified stock purchase requires that a corporation purchase stock of another corporation that constitutes at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the total number of shares of all other classes of stock, excluding nonvoting preferred stock, within a 12-month acquisition period. The purchase can take place in one transaction or in a series of transactions as long as 80% of the voting power and 80% of the total number of shares,

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