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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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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?
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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