Individuals A and B are planning to form CORPORATION C, which will engage in

manufacturing. A will contribute to machinery and equipment with a fair market

value of $100M, and an adjusted basis of $45M. Y will contribute $100M of cash.

CORPORATION C will issue to each of A and B, 100 shares of voting common stock in

exchange for the property contributed. Consequently, there will be 200 common

shares outstanding with a total initial value of $200M. What are the tax consequences

to A, B, and CORPORATION C in this transaction? See 351, 358, 362, 1001, 1032, and

1223.