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:

	FMV	Adjusted Tax Basis	Appreciation
Cash	$ 26,000	$ 26,000
Receivables	20,700	20,700
Building	108,500	54,250	54,250
Land	281,250	93,750	187,500
Total	$ 436,450	$ 194,700	$ 241,750
Payables	$ 24,600	$ 24,600
Mortgage*	138,750	138,750
Total	$ 163,350	$ 163,350

* The mortgage is attached to the building and land.

Ernesto was asking for $518,350 for the company. His tax basis in the BLI stock was $122,000. Included in the sales price was an unrecognized customer list valued at $162,000. The unallocated portion of the purchase price ($83,250) will be recorded as goodwill.

Note: Negative amounts should be indicated by a minus sign.

Required:

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?

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 part (a)] to Ernesto in liquidation of his stock?

Note: Round intermediate calculations and final answer to the nearest whole dollar amount.

c1. What are the tax benefits, if any, to Amy and Brian as a result of structuring the acquisition as a direct asset purchase?

c2. What is the tax basis in the assets received by Amy and Brian?