Lynn Jones, Shawn, Walt, and Donna are trying to decide whether they should organize a corporation and transfer their shares of stock in several corporations to this new corporation. All of their shares are listed on the New York Stock Exchange and are readily marketable. Lynn would transfer shares in Brown Corporation; Shawn would transfer stock in Rust Corporation; Walt would transfer stock in White Corporation; and Donna would transfer stock in several corporations. The stock would be held by the newly formed corporation for investment purposes. Lynn asks you, her tax adviser, whether she would have gain on the transfer of her substantially appreciated shares in Brown Corporation if she transfers the shares to a newly formed corporation. She also asks whether there will be tax consequences if she, Shawn, Walt, and Donna form a partnership, rather than a corporation, to which they would transfer their readily marketable stock. Your input will be critical as they make their decision. Prepare a letter to the client, Lynn Jones, and a memo for the firm’s files. Lynn’s address is 1540 Maxwell Avenue, Highland, KY 41099.