What is a primary feature of the 338(h)(10) election?

The primary feature of the 338(h)(10) election is that it allows for a tax treatment that resembles that of an asset sale while preserving the characteristics of a stock sale. Essentially, when a seller and buyer elect this option, it can enable the buyer to step up the basis of the assets to fair market value, which can provide significant tax advantages moving forward.

This process allows the buyer to benefit from the asset depreciation passed on from the seller, which is generally not available in a typical stock sale. This favorable tax treatment can greatly influence the buyer's after-tax returns and is often appealing in negotiations.

Regarding the incorrect choice that was selected: while it is true that the 338(h)(10) election does facilitate the treatment of the sale as an asset sale, it does involve actual legal frameworks and agreements related to asset transfers. The election itself does not eliminate the need for a transfer of assets; rather, it changes how that transfer is taxed for the purposes of both parties. Therefore, the focus of the 338(h)(10) election is more on tax benefits rather than avoiding asset transfer entirely.