Answer:
<h3>Cynthia and Dove Corporation</h3>
Any profits generated by Dove Corporation will be taxed to the corporation and also taxed to Cynthia as a shareholder whenever Dove distributes the profits as dividends. Taxing Dove and Cynthia creates a double taxation burden for both Dove and Cynthia. Dove Corporation does not get a tax deduction when it distributes dividends to Cynthia.  Furthermore, Cynthia cannot deduct any corporation loss when incurred.  These are unlike when the business was only a sole proprietorship.
Explanation:
a) Data and Calculations:
Dove Corporation
Balance Sheet
February 1, 2013
Assets
                                                     Basis to Dove     Fair Market Value
Cash                                                 $ 80,000              $ 80,000
Accounts receivable                         0                           240,000
Equipment (cost $180,000;              120,000               320,000
depreciation previously claimed $60,000)
Building (straight-line depreciation) 160,000              400,000
Land                                                    40,000               160,000
Total                                               $400,000          $1,200,000
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable—trade            $ 120,000
Notes payable—bank                    360,000
Stockholders' equity:
Common stock                              720,000
Total                                          $1,200,000