Chance buys land in 1989 for $30,000. He begins planning to form a corporation in December 2016. On January 20 2017, he takes out a loan from Third Kirksville Bank for $25,000 using the land as security. On January 22 2017, he transfers the land (with the corporation assuming the debt) in exchange for 50% of the stock. In the same transaction, Ana transfers inventory (basis of $5,000 and market value of $50,000). Ana then receives 50% of the stock and $25,000 cash from the corporation. (Chance and Ana) Hint: look at the timing of the loan and also look at the relevant economic situation and cash flow of the shareholders and think about Section 357(b).

Write a memo to me a) explaining what Chance is attempting to do and 2) how the Congress prevents him from doing it. (4 points)