1. Crow corporation has been a calendar year S corporation for several years. On August 14, 2008, one of its shareholders sells her stock to Kite Corporation. Result?

What if Kite Corporation (a C Corp) buys all the stock of Crow Corporation (S Corp) for $10 million, and Kite and the owners of Crow make a sec. 338(h)(10) election? Assume that the basis of Crow’s assets is $3 million and that the shareholders cumulatively also have a basis of $3 million in their Crow shares.