ZuoTi.Pro
Question

4. Tan Corporation desires to set up a manufacturing facility in the western part of the...

4. Tan Corporation desires to set up a manufacturing facility in the western part of the United States. After considerable negotiations with Butte, Montana, Tan accepts the following offer: land (fair market value of $4.5 million) and cash of $1.5 million.

  1. How much income, if any, must Tan recognize?

  1. What basis will Tan Corporation have in the land?

  1. Within one year of the contribution, Tan purchases equipment for $1.6 million. What basis will Tan have in the equipment?
business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Income from Land and cash receipt is a nontaxable capital contribution under sec 118. So Tan Corporation does not recognizes any income.

Again Tan will have no basis in the Land under sec 362(c)(1)(B)

Tan accepted cash was $1.5 million.
Purchase of equipment was $1.6 million
So after applying the cash receipts, Tan will have basis in the equipment of (1.6 million - 1.5 million) = $100,000.

0 0
Add a comment
Know the answer?
Add Answer to:
4. Tan Corporation desires to set up a manufacturing facility in the western part of the...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • NEED HELP ANSWERING PART C FOR #38 :) THANK YOU! Wh tior WI c. If fo...

    NEED HELP ANSWERING PART C FOR #38 :) THANK YOU! Wh tior WI c. If fo 38. LO.4 Red Corporation wants to set up a manufacturing facility in a midwestern state. After considerable negotiations with a small town in Ohio, Red accepts the following offer: land (fair market value of $3 million) and cash of $1 million. a. How much income, if any, must Red Corporation recognize? b. What basis will Red Corporation have in the land? C. Assume that...

  • Would you have dared fire Hemant K. Mody? In February, the long-time engineer had returned to work at a GE facility in P...

    Would you have dared fire Hemant K. Mody? In February, the long-time engineer had returned to work at a GE facility in Plainville, Connecticut, after a two-month medical leave. He was a very unhappy man. For much of the prior year, he and his superiors had been sparring over his performance and promotion prospects. According to court documents, Mody’s bosses claimed he spoke disparagingly of his co-workers, refused an assignment as being beneath him, and was abruptly taking days off...

  • On September 25, 2012, Japanese camera and medical equipment maker Olympus Corporation and three of its...

    On September 25, 2012, Japanese camera and medical equipment maker Olympus Corporation and three of its former executives pleaded guilty to charges related to an accounting scheme and cover-up in one of Japan’s biggest corporate scandals. Olympus admitted that it tried to conceal investment losses by using improper accounting under a scheme that began in the 1990s. The scandal was exposed in 2011 by Olympus’s then-CEO, Michael C. Woodford. As the new president of Olympus, he felt obliged to investigate...

  • On September 25, 2012, Japanese camera and medical equipment maker Olympus Corporation and three of its...

    On September 25, 2012, Japanese camera and medical equipment maker Olympus Corporation and three of its former executives pleaded guilty to charges related to an accounting scheme and cover-up in one of Japan’s biggest corporate scandals. Olympus admitted that it tried to conceal investment losses by using improper accounting under a scheme that began in the 1990s. The scandal was exposed in 2011 by Olympus’s then-CEO, Michael C. Woodford. As the new president of Olympus, he felt obliged to investigate...

  • Questions:  For Kroger deposits in transit: What is the account titled Store deposits in-transit (refer to footnote...

    Questions:  For Kroger deposits in transit: What is the account titled Store deposits in-transit (refer to footnote 1)? This is not an account you will find on the majority of company financial statements. Why does Kroger include this account? Is it odd that this account is larger than the cash balance? How do you explain this? Information Needed to Answer Questions: Jan. 28, 2017 Jan. 30, 2016 $322 910 1,649 7,852 (1,291) 898 $ 277 923 1,734 7,440 (1,272) 790 9,892...

  • Please read the article and answer about questions. You and the Law Business and law are...

    Please read the article and answer about questions. You and the Law Business and law are inseparable. For B-Money, the two predictably merged when he was negotiat- ing a deal for his tracks. At other times, the merger is unpredictable, like when your business faces an unexpected auto accident, product recall, or government regulation change. In either type of situation, when business owners know the law, they can better protect themselves and sometimes even avoid the problems completely. This chapter...

  • CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in...

    CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in Appendix A. Required: Compute the following ratios for Year 11. Liquidity ratios: Asset utilization ratios:* a. Current ratio n. Cash turnover b. Acid-test ratio 0. Accounts receivable turnover c. Days to sell inventory p. Inventory turnover d. Collection period 4. Working capital turnover Capital structure and solvency ratios: 1. Fixed assets turnover e. Total debt to total equity s. Total assets turnover f. Long-term...

  • SYNOPSIS The product manager for coffee development at Kraft Canada must decide whether to introduce the...

    SYNOPSIS The product manager for coffee development at Kraft Canada must decide whether to introduce the company's new line of single-serve coffee pods or to await results from the product's launch in the United States. Key strategic decisions include choosing the target market to focus on and determining the value proposition to emphasize. Important questions are also raised in regard to how the new product should be branded, the flavors to offer, whether Kraft should use traditional distribution channels or...

  • CASE 20 Enron: Not Accounting for the Future* INTRODUCTION Once upon a time, there was a...

    CASE 20 Enron: Not Accounting for the Future* INTRODUCTION Once upon a time, there was a gleaming office tower in Houston, Texas. In front of that gleaming tower was a giant "E" slowly revolving, flashing in the hot Texas sun. But in 2001, the Enron Corporation, which once ranked among the top Fortune 500 companies, would collapse under a mountain of debt that had been concealed through a complex scheme of off-balance-sheet partnerships. Forced to declare bankruptcy, the energy firm...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT