CREATION OF CORPORATION John Payne is the sole owner of aclassic car restoration business that specializes in therestoration of classic and muscle cars for individuals. It is notincorporated at this time. John has called his company the GASMONKEE CAR RESTORATION. John believes there might be an advantageto creating a corporation for limited liability reasons. John hasassets to transfer for the stock in Gas Monkee totalingapproximately $250,000.00. In addition, he manages Gas Monkee'soperations on a full-time basis and pays himself a salary of$80,000.00. John has a key mechanic and restoration specialistemployee, Richard Rogers, that he would like to make a shareholderin the new corporation. It is John's intent to be an eighty percent(80%) owner in the corporation and Richard would be a twentypercent (20%) owner. Richard only has cash of Ten Thousand Dollarsto invest and would like to substitute his mechanic skills (i.e.services) for the twenty percent ownership. Discuss in detail therelevant issues for John and Richard. Can the new corporation beformed? Would there be tax consequences for either John or Richard?Is there a way to avoid any tax consequences? Do you have any othersuggestions for John and Richard from a tax perspective? You mustcite in detail, using the IRAC method and Blue Book Method. AnswerJohn and Richard in a double spaced memo, fully citing in detailthe Internal Revenue Code in no more than six pages. Emphasis isplaced on citing the appropriate code.