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                                                                                                       Department of the Treasury
                                                                                                       Internal Revenue Service
Instructions for Form 8883

(Rev. October 2017)
Asset Allocation Statement Under Section 338

Section references are to the Internal Revenue U.S. Income Tax Return for an S                 Elections for Multiple Targets 
Code unless otherwise noted.                   Corporation.                                    Under Section 338
                                               Old target (consolidated return).        If the Although one Form 8023 (rather than 
General Instructions                           old target is the common parent of a            multiple Forms 8023) may be used for 
                                               consolidated group, attach Form 8883 to         targets that:
Future Developments                            its final consolidated return ending on the       Each have the same acquisition date;
For the latest information about               acquisition date. If the old target is a          Were members of the same affiliated 
developments related to Form 8883 and          member (not the parent) of a selling group      group immediately before the acquisition 
its instructions, such as legislation          that will file a consolidated return and is     date (defined below); and
enacted after they were published, go to       making a section 338(h)(10) election,             Are members of the same affiliated 
IRS.gov/Form8883.                              attach the form to the selling group's          group (defined below) immediately after 
                                               consolidated return for its tax year            the acquisition date, file a separate Form 
Purpose of Form                                including the acquisition date.                 8883 for each target corporation.
Use Form 8883, Asset Allocation                However, if an election under section 
Statement Under Section 338, to report         338(g) is made for the target, attach the       Definitions
information about transactions involving       form to the old target's deemed sale 
the deemed sale of corporate assets            return; not to the selling group's              A qualified stock purchase (QSP) is the 
under section 338. This includes               consolidated return. See Regulations            purchase of stock of at least 80% of the 
information previously reported on Form        section 1.338-10(a)(2) through (4) for          total voting power and value of the stock 
8023, Elections Under Section 338 for          details.                                        of a corporation by another corporation 
                                                                                               during a 12-month period.
Corporations Making Qualified Stock            New target.  Attach Form 8883 to the first 
Purchases.                                     return of the new target. If, on the day after    A 12-month acquisition period is the 
Although you use Form 8023 to make             the acquisition date, the new target is a       12-month period beginning with the first 
an election under section 338, you also        member of a group filing a consolidated         acquisition by purchase of stock included 
must file Form 8883 to supply information      return, attach the form to the consolidated     in the QSP.
relevant to the election. Timely file Form     return that includes the day after the 
8023 even if you do not have all the           acquisition date.
                                                                                                 The acquisition date is the first date 
information required to be supplied            Foreign target.  If a section 338(g)            on which a QSP has occurred.
separately on Form 8883.                       election is made for a foreign target for 
                                               which Form 5471, Information Return of            Recently purchased target stock is 
If an election is made under section           U.S. Persons With Respect to Certain            any stock in the target corporation that is 
338 for a qualified purchase of stock of a     Foreign Corporations, must be filed:            held by the purchasing corporation on the 
target corporation, the target corporation     The seller (or U.S. shareholder) must           acquisition date and was purchased by 
(old target) is deemed to sell its assets to   attach a copy of Form 8883 to the last          the corporation during the 12-month 
a new corporation (new target) at the          Form 5471 for the old foreign target.           acquisition period. See section 338(h)(1) 
close of the acquisition date. See             The purchaser (or its U.S. shareholder)         for special rules for stock acquisitions from 
Regulations section 1.338-1 for details.       must attach a copy of Form 8883 to the          related corporations.
There are two types of section 338             first Form 5471 for the new foreign target.
elections. A section 338(g) election is        Supplemental Form 8883                            An affiliated group is an affiliated 
made only by the purchasing corporation.                                                       group as defined in section 1504(a), 
A section 338(h)(10) election is made          If the amount allocated to any asset is         determined without regard to the 
jointly by both the old target shareholders    increased or decreased after the year in        exceptions contained in section 1504(b).
and the purchasing corporation. Form           which the sale occurs, any affected party 
8883 must be used to make both types of        must complete Parts I through IV and VI of 
section 338 elections.                         Form 8883 and attach the form to the              A corporation will be treated as a 
                                               income tax return for the year in which the     target affiliate (as defined in section 
Who Must File                                  increase or decrease is taken into              338(h)(6)) of the target corporation if each 
For elections under sections 338(g) and        account. See the instructions for Part VI       corporation was, at any time during much 
338(h)(10) both the old target and the new     and Regulations section 1.338-7 for more        of the consistency period that ends on the 
target must file Form 8883.                    information.                                    acquisition date of the target corporation, 
                                                                                               a member of an affiliate group which had 
                                                                                               the same common parent. Except as 
When and How To File                           Penalties                                       otherwise provided, a target affiliate does 
Generally, attach Form 8883 to the return                                                      not include a foreign corporation, a DISC, 
on which the effects of the section 338        If you do not file a correct Form 8883 by 
deemed sale and purchase of the target's       the due date of your return and you cannot      or a corporation to which section 936 
assets are required to be reported.            show reasonable cause, you may be               applies.
                                               subject to penalties. See sections 6721 
Old target (S corporation for a section        through 6724.                                     Class I assets are cash and general 
338(h)(10) election).  For a section                                                           deposit accounts (including savings and 
338(h)(10) election for an S corporation                                                       checking accounts) other than certificates 
target, attach Form 8883 to Form 1120S,                                                        of deposit held in banks, savings and loan 

Oct 26, 2017                                                Cat. No. 33706N

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associations, and other depository Any covenant not to compete entered provide the identifying information of the
institutions. into in connection with the acquisition of common parent of the consolidated group
an interest in a trade or a business; and instead of the old or new target. If the old
Class II assets are actively traded Any franchise trademark, or trade name or new target is a controlled foreign
personal property within the meaning of (however, see exception below for certain corporation (CFC) and does not file a U.S.
section 1092(d)(1) and Regulations professional sports franchises). income tax return, identify the U.S.
section 1.1092(d)-1 (determined without The term “section 197 intangible” does shareholder owning the largest interest in
regard to section 1092(d)(3)). In addition, not include any of the following. the CFC (or if the U.S. shareholder is a
Class II assets include certificates of An interest in a corporation, member of a consolidated group, the
deposit and foreign currency even if they partnership, trust, or estate; common parent of that group).
are not actively traded personal property. Interests under certain financial Line 2b. Enter the identifying number
Class II assets do not include stock of contracts; (EIN or SSN) of the other party.
target affiliates, whether or not actively Interests in land;
traded, other than actively traded stock Certain computer software; Part III. Target Corporation's
described in section 1504(a)(4). Examples Certain separately acquired interests in Identifying Information
of Class II assets include U.S. government films, sound recordings, video tapes, Complete Part III if the target identifying
securities and publicly traded stock. books, or other similar property; information is not provided in Part I (that is,
Interests under leases of tangible if Form 8883 is filed by the common parent
Class III assets are assets that the property; of a consolidated group including the
taxpayer marks-to-market at least annually Certain separately acquired rights to target or by the seller, purchaser, or U.S.
for federal income tax purposes and debt receive tangible property or services; shareholder filing for a foreign target).
instruments (including accounts Certain separately acquired interests in
receivable). However, Class III assets do patents or copyrights; Line 3b. An EIN is not required if a party
not include (a) debt instruments issued by Interests under indebtedness; does not have, and is not otherwise
persons related at the beginning of the Professional sports franchises acquired required to have, an EIN.
day following the acquisition date to the before October 23, 2004; and Line 3c. When identifying the country of
target under section 267(b) or 707; (b) Certain transactions costs. incorporation, include political
contingent debt instruments subject to See section 197(e) for further information. subdivisions, if any.
Regulations sections 1.1275-4, and
1.483-4, or section 988, unless the Class VII assets are goodwill and Part IV. General Information
instrument is subject to the noncontingent going concern value (whether or not the Both the old and the new target must
bond method of Regulations section goodwill or going concern value qualifies complete lines 4a through 8g.
1.1275-4(b) or is described in Regulations as a section 197 intangible).
section 1.988-2(b)(2)(i)(B)(2); and (c) debt Line 5a. Enter the consideration paid
instruments convertible into the stock of (without regard to selling or acquisition
the issuer or other property. Specific Instructions costs) for the recently purchased target
stock (defined earlier). Include only
Class IV assets are stock in trade of Part I. Filer's Identifying amounts actually paid to the seller(s) of
the target stock.
the taxpayer or other property of a kind Information
that would properly be included in the Line 5b. New Target: Enter the
Line 1a. Enter the name as shown on
inventory of the taxpayer if on hand at the acquisition costs, including any other
your income tax return.
close of the taxable year, or property held amounts capitalized in the purchasing
by the taxpayer primarily for sale to Line 1b. Enter the corporation's employer corporation's basis in the recently
customers in the ordinary course of its identification number (EIN). If the form is purchased target stock.
trade or business. filed by an individual U.S. shareholder for Old Target: Enter the selling costs of
a foreign target, enter the shareholder's the selling consolidated group, selling
Class V assets are all assets other social security number (SSN). affiliates, or S corporation shareholder(s)
than Class I, II, III, IV, VI, and VII assets. Line 1c. Indicate by checking the incurred in connection with the QSP that
applicable box whether you are filing this reduce the amount realized on the sale of
Note. Furniture and fixtures, buildings, form because you are filing the federal recently purchased target stock.
land, vehicles, and equipment, which income tax return that reflects the tax Line 5c. Enter the target's liabilities as of
constitute all or part of a trade or business results for the old target of a section 338 the beginning of the day after the
as defined in Regulations section election, or because you are filing the acquisition date. The old target's liabilities
1.1060-1(b)(2) are generally Class V federal income tax return that reflects the also are measured as of the beginning of
assets. tax results for the new target of a section the day after the acquisition date.
338 election. See When and How To File However, see Regulations section
Class VI assets are all section 197 for a discussion of who files the tax returns 1.338-1(d) regarding certain transactions
intangibles (as defined in section 197) reporting the section 338 results for the on the acquisition date. These liabilities
except goodwill and going concern value. old target and new target, respectively. may include tax consequences resulting
Section 197 intangibles include:
Workforce in place; Part II. Other Party's Identifying from the deemed sale.
Business books and records, operating Information Line 5d. New Target: Enter the adjusted
systems, or any other information base, Identify the taxpayer that files the U.S. grossed-up basis (AGUB). This is the
process, design, pattern, know-how, income tax return, if any, reflecting the tax amount for which the new target is
formula, or similar item; results under section 338 for the other deemed to have purchased all of its
Any customer-based intangible; party to the transaction. If the tax results of assets from the old target. AGUB is the
Any supplier-based intangible; the transaction are reported on a sum of:
Any license, permit, or other right consolidated return for the other party,
granted by a government unit;

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The grossed-up basis in the purchasing subject to any applicable limits under the any remaining consideration to each of the
corporation's recently purchased target Internal Revenue Code or general following classes (Class II, III, etc.). The
stock, principles of tax law. number of classes may vary depending on
The purchasing corporation's basis in Allocate consideration in Part V as the year of the acquisition. Increase the
nonrecently purchased target stock, and follows. amounts previously allocated to the assets
The liabilities of the new target in each class in proportion to their fair
(reported on line 5c). 1. Reduce the consideration by the market values on the purchase date. Do
amount of Class I assets.
See Regulations section 1.338-5 for not allocate to any asset in excess of fair
additional information. 2. Allocate the remaining market value.
consideration to Class II assets, then to If an asset has been disposed of,
Old Target: Enter the aggregate Classes III, IV, V, and VI assets in that depreciated, amortized, or depleted by the
deemed sales price (ADSP). This is the order. For each class, allocate the new target before the increase occurs, any
amount for which the old target is deemed remaining consideration to the class amount allocated to that asset by the new
to have sold all of its assets in the deemed assets in proportion to their FMVs on the target must be properly taken into account
asset sale. ADSP is the sum of: acquisition date (as discussed in the under principles of tax law applicable
The grossed-up amount realized on the previous paragraph). when part of the cost of an asset (not
sale to the purchasing corporation of the
purchasing corporation's recently 3. Allocate consideration to Class VII previously reflected in its basis) is paid
purchased target stock, and assets. after the asset has been disposed of,
The liabilities of the old target (reported If an asset can be included in more depreciated, amortized, or depleted.
on line 5c). Compute ADSP as follows. than one class, choose the lower Decreases. Allocate a decrease in
numbered class (for example, if an asset consideration as follows.
1. Enter the amount from line 5a (stock could be included in Class III or IV, choose 1. Reduce the amount previously
price) . . . . . . . . . . . . . . . . Class III). allocated to Class VII assets.
2. Divide the amount on line 1 by the
percentage of target stock (by value, Line 9. For a particular class of assets, 2. Reduce the amount previously
determined on the acquisition date) enter the total FMV of all the assets in the allocated to Class VI assets, then to
attributable to that recently purchased class and the total allocation of the Classes V, IV, III, and II assets in that
target stock . . . . . . . . . . . . . amount on line 5d, (ADSP or AGUB, order. Within each class, allocate the
3. Enter the amount from line 5b (selling whichever applies) to the class. For decrease among the class assets in
costs) . . . . . . . . . . . . . . . . Classes VI and VII, enter the total FMV of proportion to their FMVs on the acquisition
4. Grossed-up amount realized on Classes VI and VII combined, and the total date (as discussed under Increases
the sale. Subtract line 3 allocation of the amount on line 5d (ADSP above).
from line 2 . . . . . . . . . . . . . .
or AGUB, whichever applies) to Classes
5. Enter the amount from line 5c (target VI and VII combined. You cannot decrease the amount
liabilities) . . . . . . . . . . . . . . allocated to an asset below zero. If an
6. ADSP. Add line 5 to line 4. Enter here Part VI. Supplemental asset has a basis of zero at the time the
and on line 5d . . . . . . . . . . . . decrease is taken into account because it
Statement of Assets
has been disposed of, depreciated,
Transferred amortized, or depleted by the new target,
For more information see Regulations Complete Parts I through IV and Part VI the decrease in consideration allocable to
section 1.338-4. and file a new Form 8883 for each year such asset must be properly taken into
that an increase or decrease in AGUB or account under the principles of tax law
Part V. Original Statement of ADSP occurs. If an increase or decrease applicable when the cost of an asset
Assets Transferred in the amount to be allocated occurs after (previously reflected in basis) is reduced
Allocation of consideration. An the purchase date, the increase or after the asset has been disposed of,
allocation of ADSP must be made to decrease must be allocated among the depreciated, amortized, or depleted. An
determine the old target's gain or loss on assets. The reallocation is made in the asset is considered to have been
the deemed transfer of each asset, and an taxable year in which the increase or disposed of to the extent the decrease
allocation of AGUB must be made to decrease occurs. Give the reason(s) for allocated to it would reduce its basis
determine the new target's basis in each the increase or decrease in allocation. below zero.
acquired asset. Use the residual method Also enter the tax year(s) and the form
for making the allocation. The amount number of the income tax return with Transitional rules for patents, copy-
allocated to an asset, other than a Class which the original Form 8883 and any rights, and similar property. For
VII asset, cannot exceed its fair market supplemental Forms 8883 were filed. For transactions occurring before January 6,
value (FMV) on the acquisition date. For example, enter “2017 Form 1120.” 2000, the regulations applied special rules
to the allocation to particular intangible
purposes of this allocation, FMV is the Increases. Allocate an increase in assets of increases or decreases in
gross fair market value not reduced by consideration by first allocating the consideration. See the regulations in
mortgages, liens, pledges, or other debt. increase in consideration to Class I and effect prior to that time.
The amount allocated to an asset also is

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United
States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to
figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form
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The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for business 
taxpayers filing this form is approved under OMB control number 1545-0123 and is included in the estimates shown in the instructions 
for their business income tax return.
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be 
happy to hear from you. You can send us comments through IRS.gov/FormComments. Or write to the Internal Revenue Service, Tax 
Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send Form 8883 to this 
address. Instead, see When and How To File, earlier.

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