Max is the sole shareholder of Smart Corporation.He started the internet company five years ago and has been working hard to turn a profit.Predicting that Smart will to be very profitable next year,Max had Smart borrow $250,000 to pay him the salary he rightly deserves.At the end of the current year,Smart has total assets of $400,000 and liabilities of $350,000.Max's basis in his stock is $200,000.Next year,Smart does become profitable and Max is approached by Buyall Corporation,a competitor,to sell Smart.Rather than a sale,Max suggests a merger in which he receives stock in Buyall in the amount of $700,000 plus $50,000 cash for all the assets and liabilities associated with the assets ($150,000).Buyall counters with an offer of $650,000 in Buyall stock for all of the assets and the $250,000 salary liability.Should Max take Buyall's offer or insist on what he wants?

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The Answer of Max is the sole shareholder of Smart Corporation.He started the internet company five years ago and has been working hard to turn a profit.Predicting that Smart will to be very profitable next year,Max had Smart borrow $250,000 to pay him the salary he rightly deserves.At the end of the current year,Smart has total assets of $400,000 and liabilities of $350,000.Max's basis in his stock is $200,000.Next year,Smart does become profitable and Max is approached by Buyall Corporation,a competitor,to sell Smart.Rather than a sale,Max suggests a merger in which he receives stock in Buyall in the amount of $700,000 plus $50,000 cash for all the assets and liabilities associated with the assets ($150,000).Buyall counters with an offer of $650,000 in Buyall stock for all of the assets and the $250,000 salary liability.Should Max take Buyall's offer or insist on what he wants?

Max Is the Sole Shareholder of Smart Corporation