I have a quick question regarding this example. The books says that Lee would would gain +1.25M through a sale and leaseback. For me this is incorrect.
Assuming, that he has tax loss carryforward and assuming tax base 0, he would get
5M - (5-1.5)*.25 = 4.125M
But the book says that "carryforward will more than offset the 25% capital gains tax of 1.25M, thus he will get
5M - 5*0.25 + 1.5= 5.25M or 5M net.
I assume that the book incorrectly interpritates carryforwards…