Required information Problem 19-57 (LO 19-4 (Algo) [The following information applies to the questions displayed below.) 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: Cash Receivables Building Land Total Payables Mortgage Total TMV $ 16,250 23,600 142,000 228,000 $409,850 $ 24,700 154,500 $ 179,200 Adjusted Tax Banis $ 16,250 23,600 71,000 76,000 $186,850 $ 24,700 154,500 $ 179,200 Appreciation 71,000 152,000 $ 223,000 The mortgage is attached to the building and land. Ernesto was asking for $495,400 for the company. His tax basis in the BLI stock was $119,000. Included in the sales price was an unrecognized customer list valued at $193,000. The unallocated portion of the purchase price ($71,750) will be recorded as goodwill. (Negative amounts should be indicated by a minus sign.) Problem 19-57 Part a (Algo) 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? 9 < Prev 16 17 18 of 25 Next > Payables Mortgage Total $ 24,700 154,500 $ 24,700 $ 179,200 154,500 $179,200 *The mortgage is attached to the building and land. Ernesto was asking for $495,400 for the company. His tax basis in the BLI stock was $119,000. Included in the sales price was an unrecognized customer list valued at $193,000. The unallocated portion of the purchase price ($71,750) will be recorded as goodwill. (Negative amounts should be indicated by a minus sign.) Problem 19-57 Part a (Algo) 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? Cash paid Liabilities assumed Amount realized Adjusted Basis Gain or Loss Recognized Tax Rate Tax % 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? (Round intermediate calculations and final answer to the nearest whole dollar amount.) Gain or loss recognized Problem 19-57 Part c (Algo) 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? Complete this question by entering your answers in the tabs below. Req c1 Req c2 What are the tax benefits, if any, to Amy and Brian as a result of structuring the acquisition as a direct asset purchase? ONo tax benefits Tax basis in the assets received equal to the assets' fair market value. Req c2 > 9 < Prev 18 of 25 Next > ook nt 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? Complete this question by entering your answers in the tabs below. Req c1 Req c2 nt What is the tax basis in the assets received by Amy and Brian? ences Cash Accounts receivable Building Land Customer list Goodwill Total