Corporate Tax Formation

Drew, Drake, Ken, Kylie and Andrew decided for form a corporation, Fuel Coffee Company, each will end up with 2,500 shares. Each individual gave the following:

Drew gave $100,000 in cash and brewing equipment with a FMV of $100,000 and his basis was $10,000.

Drake gave a building and land with a FMV of $400,000, his basis in the property was $70,000 and the property had a loan of $200,000.

Ken gave a food truck with a FMV of $60,000, her basis in the truck was $100,000. In addition, she gave $10,000 of legal services and $130,000 of cash.

Kylie gave additional brewing equipment with a FMV of $300,000, her basis was $25,000 and the equipment had a loan of $100,000.

Andrew gave A/R of $100,000, he is a cash basis tax payer and $100,000 in cash.

All loans were transferred to the corporation. Please advise what are the tax ramifications to the new shareholders and the corporation, using code sections and numbers.

The shareholders ask, if there are any gains from the transactions, is there a way to remove the gains?

In Year 2, the company had earnings and profits from Year 1 and Year 2 of $560,000. The company paid out a distribution of $400,000, pro-rata to the shareholders in cash.

Please advise the tax ramifications to the corporation and shareholders.