Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the companys tax accounting balance sheet. The relevant information is summarized as follows: (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.)

FMV	Adjusted Tax Basis	Appreciation
Cash	$ 10,000	$ 10,000
Receivables	15,000	15,000
Building	100,000	50,000	50,000
Land	225,000	75,000	150,000
Total	$ 350,000	$ 150,000	$ 200,000
Payables	$ 18,000	$ 18,000
Mortgage*	112,000	112,000
Total	$ 130,000	$ 130,000

* The mortgage is attached to the building and land. Ernesto was asking for $400,000 for the company. His tax basis in the BLI stock was $100,000. Included in the sales price was an unrecognized customer list valued at $100,000. The unallocated portion of the purchase price ($80,000) will be recorded as goodwill.

What amount of gain or loss does BLI recognize if the transaction is structured as a direct asset sale to Amy and Brian? What amount of corporate-level tax does BLI pay as a result of the transaction?

What amount of gain or loss does Ernesto recognize if the transaction is structured as a direct asset sale to Amy and Brian, and BLI distributes the after-tax proceeds [computed in question (a)] to Ernesto in liquidation of his stock?