Joaquin and Maria operate a small business called Tech Parts. They decide to incorporate the business in California and form Tech Parts, Inc. They transfer inventory worth $600,000 with a basis of $400,000 and accounts receivable worth $200,000 with a basis of $200,000 in exchange for 100 shares of stock. Joaquin wants his smart friend Gus to be a part of the business. A week later, Gus transfers cash of $600,000 and agrees to provide consulting services over the next six months in exchange for 100 shares of stock. Assume the services are worth $200,000.

DO JOAQUIN AND MARIA HAVE ANY TAXABLE INCOME ON THE RECEIPT OF THE 100 SHARES OF STOCK? WHY OR WHY NOT?

DOES GUS HAVE ANY TAXABLE INCOME ON THE RECEIPT OF THE 100 SHARES OF STOCK? WHY OR WHY NOT?

ASSUME TWO WEEKS LATER, TECH PARTS, INC. COLLECTS THE ACCOUNTS RECEIVABLE. DOES THE CORPORATION HAVE ANY INCOME?

TWO YEARS LATER, TECH PARTS, INC. IS AUDITED BY THE IRS. THE AGENT PROPOSES AN ASSESSMENT OF TAX AGAINST JOAQUIN AND MARIA, CLAIMING THAT THEY "ASSIGNED" INCOME FROM THE INVENTORY OF $200,000 TO TECH PARTS, INC. IN ORDER FOR THE GAIN TO BE TAXED AT 21% VERSUS 37%. IS THE AGENT CORRECT?