Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (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:

	FMV			Adjusted Basis			Appreciation
Cash	$	25,000		$	25,000
Receivables		22,000			22,000
Building		131,000			65,500			65,500
Land		264,000			88,000			176,000
Total	$	442,000		$	200,500		$	241,500
Payables	$	20,500		$	20,500
Mortgage*		137,250			137,250
Total	$	157,750		$	157,750

* The mortgage is attached to the building and land.

Ernesto was asking for $552,750 for the company. His tax basis in the BLI stock was $181,000. Included in the sales price was an unrecognized customer list valued at $186,000. The unallocated portion of the purchase price ($82,500) will be recorded as goodwill. (Negative amounts should be indicated by a minus sign.)

a. 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, assuming a tax rate of 34 percent?

Cash paid
Liabilities assumed
Amount realized
Adjusted Basis
Gain or Loss Recognized
Tax Rate		34	%
Tax

b. 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?

Gain or loss recognized

c-2. What is the tax basis in the assets received by Amy and Brian?

Cash
Accounts receivable
Building
Land
Customer list
Goodwill
Total