Adams is planning to acquire Green Industries, a freestanding C corporation, in expectation that new management can be brought in to achieve substantial operating efficiencies. You have been retained to advise Adams on how to structure the acquisition. Green Industries is owned by Devante. Devante has a $6 million basis in his Green Industries stock. Devante has held his Green Industries stock long enough to get long-term capital gain treatment. Green Industries' tax basis balance sheet contains $3.5 million of assets, no liabilities, and $2.5 million of net operating loss carryovers. All parties agree that Green Industries would be worth $8 million to Adams in a deal with no step-up in the tax basis of Green Industries' assets, but would be worth $8.75 million if its asset tax basis was stepped up to fair market value in the deal. Devante faces a 37% tax rate on ordinary income and a 20% tax rate on long-term capital gains. The corporate tax rate is 21%. Option 1 is for Adams to purchase all of Green Industries' assets for $7 million in a taxable asset acquisition, followed by a complete liquidation of Green Industries. How much after-tax cash will Devante receive under Option 1? What will be Adams' total tax basis in the assets of Green Industries (i.e., the sum of the tax basis in identifiable assets and any tax basis goodwill) under Option 1? Option 2 is for Adams to pay Devante cash for his stock in Green Industries (without making a $338 election). What purchase price will Adams have to pay under Option 2 to make Devante indifferent between Options 1 and 2? Will Adams be able to use Green Industries' NOL carryovers to offset its future taxable income under Option 2? If so, explain any limitations that will apply. Should the parties choose Option 1 or Option 2 for the transaction? Explain your advice. Adams is planning to acquire Green Industries, a freestanding C corporation, in expectation that new management can be brought in to achieve substantial operating efficiencies. You have been retained to advise Adams on how to structure the acquisition. Green Industries is owned by Devante. Devante has a $6 million basis in his Green Industries stock. Devante has held his Green Industries stock long enough to get long-term capital gain treatment. Green Industries' tax basis balance sheet contains $3.5 million of assets, no liabilities, and $2.5 million of net operating loss carryovers. All parties agree that Green Industries would be worth $8 million to Adams in a deal with no step-up in the tax basis of Green Industries' assets, but would be worth $8.75 million if its asset tax basis was stepped up to fair market value in the deal. Devante faces a 37% tax rate on ordinary income and a 20% tax rate on long-term capital gains. The corporate tax rate is 21%. Option 1 is for Adams to purchase all of Green Industries' assets for $7 million in a taxable asset acquisition, followed by a complete liquidation of Green Industries. How much after-tax cash will Devante receive under Option 1? What will be Adams' total tax basis in the assets of Green Industries (i.e., the sum of the tax basis in identifiable assets and any tax basis goodwill) under Option 1? Option 2 is for Adams to pay Devante cash for his stock in Green Industries (without making a $338 election). What purchase price will Adams have to pay under Option 2 to make Devante indifferent between Options 1 and 2? Will Adams be able to use Green Industries' NOL carryovers to offset its future taxable income under Option 2? If so, explain any limitations that will apply. Should the parties choose Option 1 or Option 2 for the transaction? Explain your advice