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:

Note: Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.

The mortgage is attached to the building and land.

Ernesto was asking for $$400,000$ for the company. His tax basis in the BLI stock was $$100,000.$ Included in the sales price was an

unrecognized customer list valued at $$100,000.$ The unallocated portion of the purchase price $($$$80,000)$ will be recorded as goodwill.

Assume Ernesto agrees to sell his stock in BLI to Amy and Brian for $$400,000.$

Required:

a$.$ What amount of gain or loss does BLI recognize if the transaction is structured as a stock 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 stock sale to Amy and Brian?

c$.$ What are the tax benefits, if any, to Amy and Brian as a result of structuring the acquisition as a stock sale?

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