In Order to Induce Yellow Corporation to Build a New

question 62

Multiple Choice

In order to induce Yellow Corporation to build a new manufacturing facility in Knoxville, Tennessee, the city donates land (fair market value of $400,000) and cash of $100,000 to the corporation. Several months after the donation, Yellow Corporation spends $450,000 (which includes the $100,000 received from Knoxville) on the construction of a new plant located on the donated land.

• A) Yellow recognizes income of $100,000 as to the donation.
• B) Yellow has a zero basis in the land and a basis of $450,000 in the plant.
• C) Yellow recognizes income of $500,000 as to the donation.
• D) Yellow has a zero basis in the land and a basis of $350,000 in the plant.
• E) None of the above.

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Definitions:

Significance Level

The likelihood of incorrectly dismissing the null hypothesis in a statistical analysis when it is in fact correct.

Travel Time

The duration required to go from one location to another by any mode of transportation.

Routes

Paths or directions taken to get from one location to another, often used in navigation or in the planning of trips.

Wilcoxon Rank Sum Test

A nonparametric statistical test used to compare two independent samples to assess whether their populations differ significantly.