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 company's tax accounting balance sheet. The relevant information is summarized as follows:Note: Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign. FMVAdjusted Tax BasisAppreciationCash$13,000$$ $13,000$ Receivables$18,00018,000$ Building$80,00040,00040,000$Land$177,00070,000107,000$Total$ $288,000$$ $141,000$$ $147,000$ Payables$ $21,000$$ $21,000$ Mortgage$*92,00092,000$ Total$ $113,000$$ $113,000*$ The mortgage is attached to the building and land.Ernesto was asking for $$440,000$ for the company. His tax basis in the BLI stock was $$185,000.$ Included in the sales price was an unrecognized customer list valued at $$185,000.$ The unallocated portion of the purchase price $($$$80,000)$ will be recorded as goodwill.Rather than purchase BLI directly, Amy and Brian will have their corporation, Spartan Tax Services $($STS$),$ acquire the business from Ernesto in a tax$-$deferred Type A merger. Amy and Brian would like Ernesto to continue to run BLI, which he agreed to do if he could obtain an equity interest in STS$.$ As part of the agreement, Amy and Brian propose to pay Ernesto $$220,000$ plus voting stock in STS worth $$220,000.$ Ernesto will become a $10$ percent shareholder in STS after the transaction.

a$.$ Will the continuity of ownership interest $($COI$)$ requirements for a straight Type A merger be met?

b$.$ What amount of gain or loss does BLI recognize if the transaction is structured as a Type A merger? What amount of corporate$-$level tax does BLI pay as a result of the transaction, assuming a tax rate of $21$ percent?

c$.$ What amount of gain or loss does Ernesto recognize if the transaction is structured as a Type A merger?

d$.$ What is Ernesto's tax basis in the STS stock he receives in the exchange?