Contribution to Corporation by Nonshareholder (LO. 4)

Red Corporation wants to set up a manufacturing facility in a midwestern state. After considerable negotiations with a small town in Ohio, Red accepts the following offer: land (fair market value of $3,000,000) and cash of $1,000,000.

Note: If an amount is zero, enter "0".

a. Does Red Corporation recognize income from the receipt of the land and cash? SelectOnly from the receipt of the land.Only from the receipt of the cash.Both the land and cash will be recognized as income.It does not recognize any income from the receipt of land and cash.Correct 1 of Item 1

How much gain, if any, must Red Corporation recognize? $

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Section 351 is mandatory if a transaction satisfies the provision's requirements. The three requirements for nonrecognition of gain or loss under