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Fay, a sole proprietor is engaged in a cash basis, service business. In the current year, she incorporates the business to form Robin Corporation. She transfers assets with a basis of $400,000 (fair market value of $1.2 million), a bank loan of $360,000 (which Robin assumes) and $80,000 in trade payables in return for all of Robin's stock. What are the tax consequences of the incorporation of the business?

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