Two Individuals, Lionel and Merkin, were investigating the acquisition of a research business, the BLAND Corporation (a C corporation). As a part of their discussions with the sole shareholder of the corporation, Dr. Strangelove (an individual), they examined the company's tax accounting balance sheet. The relevant information is summarized as follows:

FMV Adjusted Basis

Cash 10,000 10,000

Receivables 15,000 15,000

Inventory 20,000 5,000

Building 100,000 50,000

Land 225,000 75,000

Total 370,000 155,000

Mortgage 112,000 112,000

Dr. Strangelove's tax basis in the BLAND stock is $100,000. Assume all corporations involved in this problem have lots of earnings and profits and have no NOL carryovers.

A. What amount of gain or loss does BLAND recognize if the transaction is structured as a direct sale to Lionel and Merkin, with Lionel and Merkin paying BLAND $400,000 in cash and assuming BLAND's $112,000 mortgage loan? [Note: Lionel and Merkin buy all of BLAND's assets (including the cash).]

B. Under the facts of part A, what corporate level tax must BLAND pay as a result of the transaction?

C. Under the facts of part A, what amount of gain or loss does Dr. Strangelove recognize if BLAND makes a liquidating distribution to him immediately after the sale of assets to Lionel and Merkin?

D. What Basis does Lionel and Merkin take in each of the acquired assets? Show each asset individually. (Don't worry about dividing the basis between the two owners).

E. Assume instead that Dr. Strangelove sells 100% of his stock in BLAND to Lionel and Merkin for $400,000. What amount of gain or loss does BLAND recognize if the transaction is structured as a stock sale?

F. Under the facts of part E, what corporate level tax must BLAND pay as a result of the transaction?

G. Under the facts of part E, what amount of gain or loss does Dr. Strangelove recognize?

H. Under the facts of part E, what is BLAND's basis in each of its assets immediately after the transaction? Show each asset individually.