Mississippi Administrative Code
Title 35 - Department of Revenue
Part 3 - Income and Franchise
Subpart 08 - Corporations
Chapter 01 - Liquidations and Distributions
Section 35-3-08-01-102 - State 338 Election

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.