To Induce Yellow Corporation to Build a New Manufacturing Facility

question 21

Multiple Choice

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 these.

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Definitions:

Automated Phone Systems

Telecommunication systems that manage calls without human intervention, often used in customer service to route calls or provide pre-recorded information.

Interactive Pager

A pager designed for two-way communication. The pager screen displays a printed message and allows the physician to respond by way of a mini keyboard.

Pager Types

Various categories or models of pagers, which are electronic devices used for sending or receiving messages.

TDD Device

Telecommunication device for the deaf; a device that allows individuals who are deaf or hard of hearing to communicate over the telephone through text.