David and Philip Farmer, two brothers, plan to form Wheat Capital Farms Incorporated. David plans to transfer property with an adjusted basis of $25,000 and a FMV of $45,000 in exchange for 90% of Wheat Capital Farms stock. Philip plans to transfer $5,000 cash in exchange for 10% of Wheat Capital Farms stock. In a binding agreement signed prior to the transfer of property, David will sell half of his stock to Philip. Prepare a memorandum to your client, David, explaining why the exchange does or does not meet the Section 351 control requirement. At a minimum, consult the following authorities:

IRC Section 351
Reg. Section 1.351-1

Memorandum Format:
To: Mr. David Farmer
Date: Current Date
Name: Your Name
Re: Transfer of Property to Wheat Capital Farms Inc.

Relevant Facts:
In this section, you will list the key facts from above that are relevant to completing the memo.

Issues:
In this section, you will identify the specific issues that need addressed. This can be very simple by stating the exact question that you are researching.

Conclusion:
In this section, you will provide your response to the issues identified above.

Analysis:
In this section, you will site your sources and analyze how you reached your conclusion.