Anne and Michael own and operate a successful mattress business. They have decided to take the business public. They contribute all the assets of the business to newly formed Spring Corporation each in exchange for ( 20 % ) of the stock. The remaining ( 60 % ) is issued to an underwriting company that will sell the stock to the public and charge ( 10 % ) of the sales proceeds as a commission. Prepare a memorandum for your tax manager explaining whether or not this transaction meets the tax-free requirements of Sec. 351 .