1. Early in 20X8, a calendar-year corporation engages your services to prepare its federal income tax return for 20X7. It informs you that it was created and capitalized in (hopefully) a 351 transaction employing only common stock. As you speak with the CFO, you learn the following with respect to the 4 participating shareholders:

1. Shareholder #1 received 5% of the stock in exchange for certain information in her custody related to the industry in which the corporation would be operating
2. Shareholder #2 received 5% of the stock in exchange for his provision of legal organizational services
3. Shareholder #3 received 30% of the stock in exchange for raw land; 2/3 of that stock was sold by Shareholder #3 immediately after the attempted 351 transaction
4. Shareholder #4 received 60% of the stock in exchange for cash.

Consider only the 351 requirements of "control" and "property".

1. Why may 351 treatment be in jeopardy (do NOT analyze the situation here; do so later; here only state the basic concern(s))?
2. To resolve this/these concern(s), what questions do you need to ask with respect to:

Shareholder #1

Shareholder #3