Background: $338($a$)(1)$ shall be treated as having sold all its assets at the close of the acquisition date at fair market value in a single transaction, and $338($a$)(2)$ shall be treated as a new corporation which purchased all the assets referred to in paragraph one as of the beginning of the day after the acquisition date. IRC Section $338$ allows a deemed sale election generating immediate taxation to the target corporation and a stepped$-$up or stepped$-$down basis to the price paid by the acquiring corporation for the target corporation stock plus liabilities on the deemed sale.Examine the benefits of IRC Section $338$ liquidation election for a target corporation and create a scenario that would demonstrate a favorable Section $338$ liquidation election for a target corporation.