Your client is the CFO of New Lithium Corporation (NLC). NLC has been negotiating with the City of Springfield to put an EV battery manufacturing facility in the Springfield Industrial Park. The CFO informs you that Springfield is willing to contribute 100 acres of the Industrial Park’s land and existing related infrastructure to NLC. Additionally, Springfield has agreed to build roads and provide further utility lines as specified by NLC as well as assist NLC in disposing of its hazardous waste and materials. In return, NLC has agreed to construct its two million square foot manufacturing facility on the donated industrial park land and create at least 1,000 high paying jobs at the facility.

The CFO inquires as to whether any of the property and/or wastewater disposal services provided to NLC will be taxable to NLC. The CFO also asks what the initial tax basis will be in the land and existing infrastructure contributed to NLC by the City of Springfield.

Draft a memo to the file regarding your advice to the CFO that includes background, your research, conclusion, and analysis of the above question. Provide reference/ explain Tax Authorities to support answer.

Answer rating: 100% (QA)

Your Name Your Position Date Subject Taxability and Initial Tax Basis of Property and Services Provided by City of Springfield to New Lithium Corporation NLC Dear CFO I have conducted research and ana... View the full answer