Your long time client John is considering starting JMP, Corporation with his two colleagues, Mary and Peter
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Question:
Your long time client John is considering starting JMP, Corporation with his two colleagues, Mary and Peter and would like your advice regarding formation.
John plans to contribute machinery worth $50,000 for 100 shares. Mary plans to contribute $50,000 for 100 shares, and Peter plans to contribute professional services for 98 shares and $1,000 for 2 shares. John has a friend who told them about Section 351, however, he isn't fully sure if the contributions mentioned above would allow them to qualify.
John wants to know the following:
- Are the Section 351 requirements met? Explain why or why not?
- What advice can you give to him, Mary and Peter?
Please respond to this post as though you are addressing John, therefore, please ensure the tone is professional.
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