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:

X-ray Diffraction

A technique used to determine the atomic and molecular structure of a crystal, in which the crystalline atoms cause a beam of incident X-rays to diffract into many specific directions.

Nucleotide

The basic building block of nucleic acids, such as DNA and RNA, comprised of a sugar, a phosphate group, and a nitrogenous base.

Phosphate Group

A functional group or radical comprising one phosphorus atom connected to four oxygen atoms, often involved in energy transfer in biological systems.

Five-Carbon Sugar

A type of sugar molecule that contains five carbon atoms, examples include ribose and deoxyribose, important in RNA and DNA structures.