Cynthia, a sole proprietor, was engaged in a service business and reported her income on the cash basis. On February 2, 2016, she incorporates her business as Dove Corporation and transfers the assets of the business to the corporation in return for all of the stock in addition to the corporation's assumption of her proprietorship's liabilities. All of the receivables and the unpaid trade payables are transferred to the newly formed corporation. The balance sheet of the corporation immediately after its formation is as follows:

Assets

....................................................... Basis to Dove ......... Fair Market Value

Cash ...................................................... $ 80,000...................... $ 80,000

Accounts receivable ................................ -0- ............................ 240,000

Equipment (cost $180,000; depreciation

previously claimed $60,000) ................. 120,000 ...................... 320,000

Building (straight-line depreciation) .... 160,000 ...................... 400,000

Land ........................................................ 40,000 ......................... 160,000

Total ...................................................... $400,000 .................. $1,200,000

Liabilities and Stockholder's Equity

Liabilities:

Accounts payable-trade .............................................................. $ 120,000

Notes payable-bank ........................................................................ 360,000

Stockholder's equity:

Common stock .......................................................................... 720,000

Total ....................................................................................... $1,200,000

Discuss the tax consequences of the incorporation of the business to Cynthia and to Dove Corporation?