Frank, Paul, and Sam are considering merging their respective unincorporated businesses into a new C corporation called FPS. Frank would transfer land and a building with a $50,000 adjusted basis and $100,000 FMV to the corporation in exchange for $100,000 of FPS common stock. Paul would transfer inventory with an adjusted basis of $60,000 and $100,000 FMV in exchange for $50,000 of FPS stock and $50,000 of FPS 10-year notes. Sam would contribute equipment with an adjusted basis of $80,000 and $60,000 FMV along with legal services worth $40,000 in exchange for $100,000 of FPS stock. 

Prepare a client memo that details the tax consequences of the transactions to FPS, Frank, Paul, and Sam.