Emily has operated her startup venture as a sole proprietorship since launching the business two years ago. David, a friend from college, has been collaborating with Emily, and together they have developed an innovative software app. They were overjoyed that as soon as the app was introduced into the market, it was an immediate hit$$and it has gained increasing recognition and market traction as sales continue to rise. After only a short period of success though, Emily becomes convinced that the upside potential for even more growth is significant. However, she realizes that a leap to that level of growth and market pen$-$etration can only be achieved with a large infusion of capital that she is unable to fund from her resources.

Fortunately, Emily$$s friend Ethan, who is a venture capitalist, is enthusiastic about making a large invest$-$ment in the business in exchange for an equity stake. Ethan agrees that Emily$$s startup easily will enjoy remarkable success once it has the necessary additional resources. To integrate Ethan$$s capital into the ven$-$ture, the sole proprietorship will be incorporated with Emily and Ethan each contributing assets in exchange for stock in newly formed Transformation, Inc. Emily also has asked David, an invaluable employee and a major contributor to the app$$s development, if he would be interested in becoming a shareholder in Transformation. He was given the option of transferring either property or services in exchange for stock. However, at this point, David is undecided about what he will do$.$

Emily receives $200$ shares of Transformation stock in exchange for the transfer of the following sole proprietorship assets to the new corporation as follows:

than will contribute $$48$ million of cash for $4,800$ shares of Transformation stock.What will be the tax and non$-$tax implications relating to the formation of Transformation, Inc.?