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 $10,000 $10,000

Receivable 15,000 15,000 50,000

Building 100,000 50,000 100,000

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

Ernesto was asking for $400,000 for the company. His tax basis in the BLI stock was $100,000. Included in the sale price was an unrecognized customer list value at $100,000. The unallocated portion of the purchase price ($80,000) will be goodwill.