Problem $20-38($LO$.2)$

On April $23,2022,$ Auk Corporation acquires $100\%$ of the outstanding stock of Amazon Corporation $($E & P of $$750,000)$ for $$1,200,000.$ Amazon Corporation has assets with a fair market value of $$1,400,000($basis of $$800,000),$ no liabilities, and no loss or tax credit carryovers. Auk Corporation files a timely $338$ election. Assume that both the aggregate deemed sale price $($ADSP$)$ and adjusted grossed$-$up basis $($AGUB$)$ are $$1,306,329.$

If an amount is zero, enter $"0".$ If required, round your answers to the nearest dollar.

Question Content Area

a$.$ What are the tax consequences of the $338$ election to Amazon Corporation and to Auk Corporation?