Nate Network $("$Nate$")$ developed an idea for a new social media venture. He would like to form a start$-$up company, raise $$150,000$ of additional capital and hire an experienced person to manage the business. He has located Venturer, who is willing to invest $$150,000$ cash and Manager, who has agreed to serve as chief operating officer if the terms are right.

The parties have decided to join forces and form Newco Network, Inc. $("$Newco$")$ as a $"$C$"$ corporation. Nate will transfer tangible assets and intellectual property with an aggregate basis of $$50,000$ and an agreed fair market value of $$200,000($do not be concerned with the character of the individual assets for this problem$)$; Venturer will contribute $$150,000$ cash; and Manager will enter into a five$-$year employment contract. Nate would like effective control of the business; Venturer is interested in a guaranteed preferred return on his investment but also wants to share in the growth of the company; and Manager wants to be fairly compensated $($she believes her services are worth approximately $$80,000$ per year$)$ and receive stock in the company, but she cannot afford to make a substantial cash investment. All the parties wish to avoid adverse tax consequences