Question: Devon and Zhang formed a corporation (SP, Inc) on June 1 to develop a drug to address split personalities. Devon will contribute a patented formula

Devon and Zhang formed a corporation (SP, Inc) on
Devon and Zhang formed a corporation (SP, Inc) on June 1 to develop a drug to address split personalities. Devon will contribute a patented formula valued at $200,000 in return for 50% of the stock in the corporation. Zhang will contribute an experimental formula worth $120,000 and medical services in exchange for his 50% share of the stock. Devon's tax basis in the patented formula is $125,000. Zhang has a basis of $15,000 in his experimental formula. Research and describe the tax consequences of this transaction in the form of a tax memo

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