Extract to table

Based on our analysis, and subject to the limitations and qualifications set forth in Section XII below, we conclude that: (a) the asset purchase structure is tax-efficient for Crestline and provides a stepped-up basis in all acquired assets equal to the allocated purchase price; (b) timely filing of the Pennsylvania Bulk Sale Notice and receipt of the tax clearance certificate are critical to avoid successor liability; (c) the Pennsylvania Realty Transfer Tax obligation of approximately $360,000 (split equally between Buyer and Seller) is a manageable closing cost; (d) the identified $420,000 sales/use tax exposure should be fully addressed through Seller indemnification and, where possible, pre-closing resolution or holdback; (e) Seller's S-corporation status results in pass-through treatment to the Horvath shareholders, and the potential built-in gains tax under §1374 must be confirmed as inapplicable through verification of the S-election date; (f) no §338 election is needed; and (g) Crestline must register as a foreign LLC in Pennsylvania and should undertake a multistate nexus study promptly following the closing

The allocation to the non-competition agreements must be separately stated on IRS Form 8594 and must be supported by reasonable valuation evidence

If the parties file inconsistent allocations, each is required to disclose the inconsistency to the IRS, which significantly increases the likelihood of audit scrutiny

§7240) provides that when a person sells or transfers a business, or the stock of goods of a business, in bulk, the purchaser must notify the Pennsylvania Department of Revenue ("PA DOR") at least sixty (60) days prior to the date of the sale or transfer

Accordingly, Crestline must file a Bulk Sale Notice with the PA DOR at least sixty (60) days prior to the Closing Date

Based on the estimated Closing Date of July 31, 2025, the Bulk Sale Notice must be filed no later than approximately June 1, 2025