$1.$ A$,$ B$,$ C$,$ D$,$ and E$,$ all individuals, form X Corporation to engage in a manufacturing business.$$ X issues $100$ shares of common stock. A transfers $$25,000$ cash for $25$ shares; B transfers inventory with a value of $$10,000$ and a basis of $$5,000$ for $10$ shares; C transfers unimproved land with a value of $$20,000$ and a basis of $$25,000$ for $20$ shares; D transfers equipment with a basis of $$5,000$ and a value of $$25,000($prior depreciation taken was $$20,000)$ for $25$ shares; and E transfers a $$20,000($face amount and value$)$ installment note for $20$ shares. E received the note in exchange for land with a $$2,000$ basis that he sold last year. The note is payable over a five$-$year period, beginning in two years, at $$4,000$ per year plus a market rate of interest.