PLEASE HELP

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 Appreciation Basis 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