Four friends plan to form a corporation for purposes of constructing a shopping center. Charlie will contribute the land for the project and wants more security than shareholder status provides. He is contemplating two possibilities: receive corporate bonds for his land or take out a mortgage on the land before transferring it to the corporation. Comment on the choices Charlie is considering. What alternatives can you suggest?

Keiths sole proprietorship holds assets that, if sold, would yield a gain of $ It also owns assets that would yield a loss of $ Keith incorporates his business using only the gain assets. Two days later, Keith sells the loss assets to the newly formed corporation. What is Keith trying to accomplish? Will he be successful? Explain.

Sarah incorporates her small business but does not transfer the machinery and equipment the business uses to the corporation. Subsequently, she leases machinery and equipment to the corporation for an annual rent. What tax reasons might Sarah have for not transferring the machinery and equipment to the corporation when the business was incorporated?