Answer all questions related to the problem and explain answers.

On March 1 of the current year, Ann, Bill, Cathy and Don form Alphabet Corporation and transfer the following items: Transferor Asset Fair Market Value # of shares Adjusted Basis to transferor $15,000 $20,000 Ann $30,000 $90,000 $70,000 $70,000 500 Land Building Mortgage on the land and building Equipment Vehicle Consulting services Bob Cathy Don $23,000 $20,000 $0 $45,000 $15,000 $5,000 300 150 50 Ann purchased the building for $25,000 several years ago and has claimed a depreciation on the building. In addition to 300 shares, Bob also receives a note for $ 5,000. Bob bought the equipment for $50,000 three years ago. a. What are the consequences to the corporation and each of the shareholders as a consequence of these transfers? What advice do you have for the individuals? b. Assume the same facts above except Don provides consulting services worth $40,000 for 400 shares. Does your response change? What advice do you have for the individuals