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	$	11,250		$	11,250
Receivables		19,000			19,000
Building		123,500			61,750			61,750
Land		246,000			82,000			164,000
Total	$	399,750		$	174,000		$	225,750
Payables	$	25,700		$	25,700
Mortgage*		176,250			176,250
Total	$	201,950		$	201,950

* The mortgage is attached to the building and land.

Ernesto was asking for $470,800 for the company. His tax basis in the BLI stock was $113,000. Included in the sales price was an unrecognized customer list valued at $174,000. The unallocated portion of the purchase price ($99,000) 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?

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?

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?