Sec. 338 Election.

Gator Corporation is considering the acquisition of Bulldog Corporations stock in exchange for cash. Two options are under review: (1) Gator purchases the assets from Bulldog for $1.4 million or (2) Gator purchases the Bulldog stock for $1 million and makes a Sec. 338 election shortly after the stock purchase. Bulldog has no NOL or capital loss carryovers. Bulldogs balance sheet is presented below.

Assets	Adjusted Basis	FMV	L & E	Amount
Cash	100,000	100,000	Short-term debt	200,000
Marketable securities	140,000	200,000	Long-term debt	200,000
AR	100,000	100,000	Paid-in-capital	300,000
Inventory (FIFO)	100,000	150,000	Retained earnings	700,000
Plant and Equipment	200,000	500,000
Intangibles	0	350,000
Total	640,000	1,400,000		1,400,000

Please make sure to provide detail works for credit with exact math solution for each section.

1-What advantages would accrue to Gator if it purchases the assets directly? What disadvantages would accrue to Bulldog if it sells the assets and then liquidates?

2-What advantages would accrue to Gator if it purchases the Bulldog stock for cash and subsequently makes a Sec. 338 election? What advantage would accrue to Bulldog if its shareholders sell the Bulldog stock?

3-How would your answers change if Bulldog had incurred $250,000 of NOLs in the current year that it cannot carry back in full due to insufficient taxable income in the preceding two years?