Jennelle and Paula are equal partners in the J&P Manufacturing Partnership.
The partnership will form J&P Corporation by exchanging the assets and liabilities of the J&P Manufacturing Partnership for all the corporation's stock on September 1 of the current year.
The partnership then will liquidate by distributing the J&P Corporation stock equally to Jennelle and Paula. Both shareholders use the calendar year as their tax year and desire that the corporation make an S election.
What tax issues should Jennelle and Paula consider with respect to the incorporation?