John Payne is the sole owner of a classic car restorationbusiness that specializes in the restoration of classic and musclecars for individuals. It is not incorporated at this time. John hascalled his company the GAS MONKEE CAR RESTORATION. John believesthere might be an advantage to creating a corporation for limitedliability reasons. John has assets to transfer for the stock in GasMonkee totaling approximately $250,000.00. In addition, he managesGas Monkee's operations on a full-time basis and pays himself asalary of $80,000.00. John has a key mechanic and restorationspecialist employee, Richard Rogers, that he would like to make ashareholder in the new corporation. It is John's intent to be aneighty percent (80%) owner in the corporation and Richard would bea twenty percent (20%) owner. Richard only has cash of Ten ThousandDollars to invest and would like to substitute his mechanic skills(i.e. services) for the twenty percent ownership. Discuss in detailthe relevant issues for John and Richard. Can the new corporationbe formed? Would there be tax consequences for either John orRichard? Is there a way to avoid any tax consequences? Do you haveany other suggestions for John and Richard from a tax perspective?You must cite in detail, using the IRAC method and Blue BookMethod. Answer John and Richard in a double spaced memo, fullyciting in detail the Internal Revenue Code in no more than sixpages. Emphasis is placed on citing the appropriate code.