Let me get this straight -- you shipped a working amp, and it was packaged by UPS to their own standards, and they shipped it. You paid separate fees for packaging and for shipping, and UPS assumed responsibility for BOTH packing safely, and for transporting without damage. While it was under their custody and control, it was transposed from working condition into non-working condition. This seems to be 100% a shipper's problem. Immediately file a claim with UPS.
I hate to see these sorts of problems come up, so I won't ship anything fragile via UPS. I mean, NOTHING. I always use a different shipper like DHL or FedEx. As a rule they're much gentler in how your packages are treated. (I hate to say it, but shipping a combo amp via UPS is a really bad thing to do. Anyone who ships a heavy combo amp via UPS is just begging for this kind of problem when the amp falls off of the conveyor belt.)
Back to your responsibilities -- as a seller, it is your responsibility to assume 100% of the blame for things that are your fault, and 0% of the blame for things that are not your fault. You need to be fair to everyone involved in this transaction, including yourself. If your listing was inaccurate, you owe the buyer a 100% refund, including shipping both ways. OTOH, if your description was accurate and UPS killed the amp, then you should not consider indemnifying UPS from their responsibility not to damage the amp in transit. Its not your job to cover the loss, or to even issue a refund, which would involve you taking the risk of repairing the amp and then reselling it.
If you are 100% honest that you shipped a working amp, and it was in the condition that you described it to be in when shipped, then its your responsibility to assist the buyer in filing the claim with UPS. Its not your job to step into UPS' position and take their responsibility for damaging the amp. Having paid UPS to package the item to their own standards, and having paid for insurance against damage, its time to file a claim.
Here's what I would do:
1. IMMEDIATELY file a claim for damage with UPS. Every day you wait means less chance of recovery.
2. Work cooperatively with your buyer. Have the buyer take the amp to a repair shop and have it examined by a technician. Ask the technician to prepare an affidavit that documents that the damage likely occurred in transit. File the affidavit with your UPS claim.
3. Next time, sell your amp with local pickup only.
Perhaps if you included a link to your auction listing we could review it and see if any other conditions or guarantees might have been offered or implied.
If you need to read something to cheer you up about UPS, read this.