Josie has operated a successful doll manufacturing business as a sole proprietorship since 2016. She plans on incorporating the business on January 1, 2019 by transferring the following assets; Cash $ 1,000,000 Inventory FMV $ 4,000,000 Tax Basis $3,000,000 Manufacturing Equipment (7-year MACRS property) FMV $ 5,000,000, Cost when purchased in 2016 $8,000,000, Accumulated depreciation on December 31, 2018 is $6,250,800 calculated as follows: Cost in 2016 Bonus Depreciation (2016) MACRS Depreciation (2016) $ 4,000,000 X.1429 MACRS Depreciation (2017) 4,000,000 X.2449 MACRS Depreciation (2018) 4,000,000 X.1749 Accumulated Depreciation $8,000,000 4,000,000 571,600 979,600 699,600 $ 6,250,800 In exchange for these assets. Josie will receive 100 % of the common stock of Josie, Inc (1) In 2019, JI will need to transport the manufacturing equipment to its new manufacturing facility, and have it installed. C Transportation and installation costs will be $ 400,000. Josie's questions are as follows: 1. Will Josie recognize any gain or loss on the exchange of the assets for 100 % of Jl stock? 2. What basis will Jl have in the inventory and the manufacturing equipment received in the exchange? 3. What basis will Josie have in her Jl stock? 4. What is the tax treatment of the 2019 transportation and installation costs?! 5. Will Jl be able to depreciate the manufacturing equipment transferred by Josie? What method will Jl utilize to calculate depreciation? Calculate the 2019 depreciation expense