Greetings!
When you can't find the answer, sometimes the best thing to do is just do what seems logical. Here's what I would suggest: Assuming that you've already established what work you are discussing, and the author and year it was written (e.g., "In Ernest Hemingway's 1927 short story, "Hills Like White Elephants," ...), make clear which characters are having the conversation, and which one speaks first, then simply lay it out as you did above, with each line as its own paragraph. After the last line you are quoting, put the page number in parentheses next to it, like this: "No, it isn't." (245).
I hope this helps!
Thanks,
Sarah, EssayForum.com
Sarah, EssayForum.com