Question: Joseph Johnson established JJ Inc. in 2013. When he established the corporation, he exchanged $10,000 cash for 100% of the common shares with a Paid-Up

Joseph Johnson established JJ Inc. in 2013. When he established the corporation, he exchanged $10,000 cash for 100% of the common shares with a Paid-Up Capital amount of $10,000. Early in 2015, Joseph transferred additional assets to the corporation. The assets he transferred consisted of a car he has been using as his personal automobile with a fair market value of $14,890 (adjusted cost basis of $9,000) and cash in the amount of $8,000. In exchange for these assets, he received stock with a Paid-Up Capital amount of $34,000.

What are the tax consequences to Joseph and to JJ Inc. of this 2015 transfer?

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