Aubrey Newman transferred two items of property to N corporation, in return for 800 shares of N corporation (which had only 150 shares outstanding prior to Aubrey's transfer). One item she transferred had an adjusted basis of $10,000 and fair market value of $15,000 and was subject to an $8,000 liability. The second item had an adjusted basis of $2,000 and a fair market value of $5,000 and was subject to a $3,000 liability. In return, she received the 800 shares of stock with a fair market value of $8,000 plus $2,000 in cash.

Please address the following:

1. Is this exchange taxable to Aubrey and N corporation? Why or why not?
2. What is the amount of gain (if any) that Aubrey must recognize on this exchange?
3. What is her basis in the N corporation stock she receives?
4. What is the basis of N corporation in the assets it receives in the transfer?
5. How would your answer differ if Aubrey performed services (instead of transferring property) in return for the shares of N corporation?