If both buyer and seller agree to a Section 338 (h)(10) election, what benefit does the buyer receive?

When a buyer and seller agree to a Section 338(h)(10) election, the primary benefit for the buyer is the ability to deduct goodwill on a straight-line basis over 15 years. This is significant because it allows the buyer to treat the transaction as a stock sale for tax purposes while simultaneously receiving the tax benefits typically associated with an asset sale.

Under a Section 338(h)(10) election, the buyer can step up the basis of the acquired assets to their fair market value, which allows for greater depreciation and amortization deductions. As part of this process, the buyer is specifically allowed to amortize the goodwill associated with the acquisition over a period of 15 years, effectively reducing taxable income over that time frame.

The other options do not accurately represent the benefits associated with a Section 338(h)(10) election. For example, while accelerating depreciation of assets is indeed a perk, the specific benefit in question relates directly to the treatment of goodwill. Similarly, eliminating tax liabilities on the acquisition or deferring income recognition from the acquisition are not aspects of the Section 338(h)(10) election, making it essential to focus on how the treatment of goodwill is structured and the implications it has for the buyer's tax position.