Hugo and Helga each own unincorporated businesses. They plan to form a corporation to which they would transfer all of their business assets and liabilities in exchange for all of the corporation’s stock. Hugo’s assets have substantially appreciated over time. A transfer of all of his assets and liabilities would result in an excess of liabilities over the adjusted basis of the assets. Helga has substantial unrealized losses on some of her business properties (e.g., land and a building). Her tax accountant has recommended that she sell the properties to a third party or to the corporation to recognize capital losses or Sec. 1231 losses that could be used to offset personal capital or ordinary gains. The sales proceeds then could be invested in the new corporation. What tax issues should Hugo and Helga consider with respect to the asset transfer, the organizational expenditures, the capital structure, and other aspects of the corporate formation?