1. gain recognized, if any; 2. basis in land contributed by Lark City; 3. basis in land/building purchased), and
1. gain recognized, if any; 2. basis in land contributed by Lark City; 3. basis in land/building purchased), and
Chapter17: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 39P
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Question
Transcribed Image Text:Lark City (a government entity) donates land
that has a FMV of $800,000 and cash of
$100,000 to Orange Corporation as an
inducement to locate in the city. Four months
later, Orange purchases additional land and a
building at a cost of $500,000 and moves its
operations to Lark City. Ann, the sole
shareholder, contributes equipment (basis of
$70,000 and fair market value of $200,000) to
help Orange in its new operations in Lark City.
What are the amounts to Orange
Corporation?
1. gain recognized, if any;
2. basis in land contributed by Lark City;
3. basis in land/building purchased), and
4. tax consequences of the contribution from
Ann to Orange Corporation?
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