Gabriella and Juanita form Luster Corporation. Gabriella transfers cash of $40,000 and property with a basis of $5,000 and a market value of $20,000 for 6,000 shares of stock. Juanita contributes services worth $15,000 and cash of $5,000 for 2,000 shares of stock. These are the only contributions to the corporation at formation. Pick the most accurate statement for the treatment of this transaction.

Question options:

	Gabriella's transfer is tax free. Juanita's receipt of stock for services is taxable but the transferors meet the control requirement because Juanita contributes a sufficient amount of property in the transaction.
	Both transfers are taxable
	Neither of the above