Overview

Part I

As mentioned above, FSI is interested in acquiring either Lemonaid or Limeaid for $$10,000.$

Below is the relevant information for the transaction.

Lemonaid $=$ S Corp Limeaid $=$ C Corp

a$)$ What is the maximum price that an acquirer will pay to acquire Limeaid in a taxable asset

sale given that it will pay $$10,000$ in a taxable stock acquisition?

b$)$ What is the maximum price that an acquirer will pay to acquire Lemonaid in a taxable stock

sale followed by an IRC Sec. $338($h$)(10)$ election given it will pay $$10,000$ in a taxable stock

acquisition without the election?

c$)$ What is the minimum price that Limeaid's shareholders will accept under part $($a$)$ above?

d$)$ What is the minimum price that Lemonaid's shareholders will accept under part $($b$)$ above?

e$)$ Given your answer in part $($a$)$ and part $($c$),$ should a taxable asset sale structure be employes

in the sale of Limeaid? Why or why not?

f$)$ Given your answers to part $($b$)$ and $($d$),$ should the IRC Sec. $338($h$)(10)$ election be made in

the sale of Lemonaid? Why or why not?