Research Problem 2. Joel has operated his business as a sole proprietorship for many but has decided to incorporate the business in order to limit his exposure to personal liability. The balance sheet of his business is as follows: Fair Market Value Adjusted Basis 50,000 Assets: 50,000 40,000 Cash 40,000 Accounts receivable 60,000 30,000 200,000 Inventory 10,000 Fixed assets $350,000 $130,000 25,000 Liabilities 25,000 Trade accounts payable 175,000 175,000 Notes payable 150,000 (70,000) Owner's equity $350,000 $130,000 One problem with this plan is that the liabilities of his sole proprietorship exceed the basis of the assets to be transferred to the corporation by $70,000 ($200,000 $180,000) Therefore, Joel would be required to recognize a gain of $70,000. He is not pleased with this result and asks you about the effect of drawing up a $70,000 note that he would transfer to the corporation. Would the note, which promises a future payment to the corporation of $70,000, enable Joel to avoid recognition of the gain