Required information Problem 19-58 (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: (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.) Cash Receivables Building Land Total Payables Mortgage Total FMV $ 17,000 20,000 97,000 214,000 $348,000 $ 23,000 112,000 $ 135,000 Adjusted Tax Basis $ 17,000 20,000 48,500 40,000 $ 125,500 $ 23,000 112,000 $ 135,000 Appreciation The mortgage is attached to the building and land. 48,500 174,000 $ 222,500 Ernesto was asking for $465,000 for the company. His tax basis in the BLI stock was $140,000. Included in the sales price was an unrecognized customer list valued at $140,000. The unallocated portion of the purchase price ($112,000) will be recorded as goodwill. Assume Ernesto agrees to sell his stock in BLI to Amy and Brian for $465,000. Problem 19-58 Part a (Algo) 3 Cash Receivables Building Land Total Payables Mortgage Total FMV $ 17,000 20,000 97,000 214,000 $348,000 $ 23,000 112,000 $ 135,000 Adjusted Tax Basis $ 17,000 20,000 Appreciation. 48,500 48,500 40,000 $125,500 174,000 $ 222,500 $ 23,000 112,000 $ 135,000 The mortgage is attached to the building and land. Ernesto was asking for $465,000 for the company. His tax basis in the BLI stock was $140,000. Included in the sales price was an unrecognized customer list valued at $140,000. The unallocated portion of the purchase price ($112,000) will be recorded as goodwill. Assume Ernesto agrees to sell his stock in BLI to Amy and Brian for $465,000. Problem 19-58 Part a (Algo) 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. Gain or loss recognized Corporate-level tax b. What amount of gain or loss does Ernesto recognize if the transaction is structured as a stock sale to Amy and Brian? Gain or loss recognized