Short answer

Joseph Johnson established JJ Inc. in 2013. When he established the corporation, he exchanged $10,000 cash for 100% of the common shares with a Paid-Up Capital amount of $10,000. Early in 2015, Joseph transferred additional assets to the corporation. The assets he transferred consisted of a car he has been using as his personal automobile with a fair market value of $14,890 (adjusted cost basis of $9,000) and cash in the amount of $8,000. In exchange for these assets, he received stock with a Paid-Up Capital amount of $34,000. What are the tax consequences to Joseph and to JJ Inc. of this 2015 transfer? (Note: Joseph does not use Section 85 for this transfer. This question has nothing to do with material related to tax-deferred transfers under Section 85.)