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Question 21 2.5 pts Over the years, the original 4 shareholders have sold Avengers stock for operating capital and now together only owns 80% of Avengers' class of common stock (the only class of stock) and have voting rights equal to their ownership. Peggy, Captain America' spouse, owns 10% of the common stock and has no voting rights equal to her ownership; her stock has AB of $250,000. The remaining 10% is owned by Spider-Man who has voting rights to equal to his ownership. his stock has AB of $150,000. In January 2020, a potential investor, Iron Man, approaches Captain America with the following two business proposals. PROPOSAL 1 - Iron Man will transfer an investment of $2,000,000 cash to Avengers, but immediately after, Iron Man wants to Avengers to elect to be an S Corporation. Captain America, Captain Marvel, Black Widow and Thor agree and will sign the consent forms, but Spider-Man and Peggy do not agree. Captain America tells Iron Man that they will go ahead with the election to become an S Corporation by March 1, 2020 because he and Captain Marvel, Black Widow and Thor own the majority of the shares in Avengers and because he controls Crystal's shares through the rules for related parties, so it doesn't matter that Spider-Man does not consent because his ownership is small. PROPOSAL 2 - Iron Man and Captain America will form a new corporation called Xandar, Inc. where Iron Man will transfer $2,000,000 cash and Captain America will transfer his invention of stamping unique individual snowflakes from ice sheets. They will each own 50% of the common stock (only class of stock) in Xandar, Inc. Then before July 1, 2020, Xandar, Inc, will file the election to become an S Corporation for the 2020 tax year with only Iron Man and Captain America as consenting shareholders. You are Captain America's tax advisor, state which one of the proposals is his best choice and explain why