(Solution) - Jennelle and Paula are equal partners in the J P Manufacturing -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

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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?