Lark City (a government entity) donates land that has a FMV of $800,000 and cash of $100,000 to Orange Corporation as an inducement to locate in the city. Four months later, Orange purchases additional land and a building at a cost of $500,000 and moves its operations to Lark City. Ann, the sole shareholder, contributes equipment (basis of $70,000 and fair market value of $200,000) to help Orange in its new operations in Lark City.

What are the amounts to Orange Corporation?

1. gain recognized, if any;

2. basis in land contributed by Lark City;

3. basis in land/building purchased), and

4. tax consequences of the contribution from Ann to Orange Corporation?

Answer rating: 100% (QA)

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