SCENARIO: The Pima and Southern Railroad (PSRR) is a small railroad operating in rural Arizona. It exists by carrying freight to remote areas of the southwest. This year the PSRR needs to replace a 30- mile section of its track. The PSRR has bids from a contractor to replace the track for the following amounts: Cost of new track $5,000,000 Installing new track $3,000,000 Road bed grading and improvements $2,500,000 Removing old track ( net of salvage) $1,500,000 Total $12,000,000
Write a tax research memo regarding the scenario detailed below.
SCENARIO: The Pima and Southern Railroad (PSRR) is a small railroad operating in rural Arizona. It exists by carrying freight to remote areas of the southwest. This year the PSRR needs to replace a 30- mile section of its track. The PSRR has bids from a contractor to replace the track for the following amounts:
Cost of new track $5,000,000
Installing new track $3,000,000
Road bed grading and improvements $2,500,000
Removing old track ( net of salvage) $1,500,000
Total $12,000,000
The old track is fully
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