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:

Fringe Benefit

Additional compensation provided to employees beyond their regular salary, such as health insurance, paid time off, or retirement contributions.

Paid Time Off

Employment benefit allowing workers to take a certain number of days off while still receiving pay.

Practice Manager

An individual responsible for overseeing the day-to-day operations of a medical practice, including staffing, budgeting, and ensuring quality patient care.

Providers

Individuals or organizations that offer healthcare services to patients, such as doctors, nurses, hospitals, and clinics.