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	$	12,750		$	12,750
Receivables		19,400			19,400
Building		129,000			64,500			64,500
Land		235,500			78,500			157,000
Total	$	396,650		$	175,150		$	221,500
Payables	$	22,800		$	22,800
Mortgage*		141,750			141,750
Total	$	164,550		$	164,550

* The mortgage is attached to the building and land.

Ernesto was asking for $501,850 for the company. His tax basis in the BLI stock was $179,000. Included in the sales price was an unrecognized customer list valued at $185,000. The unallocated portion of the purchase price ($84,750) will be recorded as goodwill.

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?

Gain or loss recognized: