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The City of Boston made a capital contribution of land to Fenway Company as an inducement...

The City of Boston made a capital contribution of land to Fenway Company as an inducement to the company to build a manufacturing plant in the city. Boston paid $600,000 for the land several years ago and it currently has a fair market value of $1,000,000. What is the tax basis of the land to Fenway Company?

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Answer #1

Solution:

Fenway Company basis of the land = $600,000.

Reason: Being the cost is less than the fair marcket value.

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