To be an S-Corp certain rules must be met during the entire existence of the S-election. It's impossible to confirm with certainty that the shareholders did not do something to violate the rules that would terminate the S-election. Some of the rules can be confirmed through tax due diligence, but when you have an S-Corp that has been around for 30 years or more, it's next to impossible to obtain the certainty you need/want.

To make a valid 338 or 336 elections, the Target must have a good S-election, if they do not then your 338/336 election is not valid, and you will not get the step up in the tax basis of the assets you thought you were.

Also, there are rules on when 338 vs 336 can be used so if you go this route, make sure you understand them so you make the correct election.

If it’s just a simple situation where one person or a Husband-wife owned the S corp for its whole life you’re often fine with a 336e. If it’s more history than that…