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4. Tan Corporation desires to set up a manufacturing facility in the western part of the United States. After considerable negotiations with Butte, Montana, Tan
4. Tan Corporation desires to set up a manufacturing facility in the western part of the United States. After considerable negotiations with Butte, Montana, Tan accepts the following offer: land (fair market value of $4.5 million) and cash of $1.5 million.
- How much income, if any, must Tan recognize?
- What basis will Tan Corporation have in the land?
- Within one year of the contribution, Tan purchases equipment for $1.6 million. What basis will Tan have in the equipment?
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