City of Los Angeles donates land to ABC Corporation as an inducement for ABC to locate there. The land is worth $2 million. The city also donates $500,000 of cash to ABC.

A. what basis will ABC corporation have in the land?

B. If ABC purchases property six months later with $500,000 cash, what basis will it have in the property?

The correct answers to both A and B are zero, but can someone offer explanation why is that? (ABC will have a zero basis in land, and a zero basis in property).