Case study of locust corporation

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Reference no: EM13259173

Locust Corporation desires to set up a distribution facility in a southern state. After considerable negotiations with a small town in Alabama , Locust accepts the following offer: land (fair market value of $3million) and cash of 1million.

a. How much gain, if any, must Locust Corporation recognize?

b. What basis will Locust Corporation have in the land?

c. Within one year of the contribution, Locust constructs a building for $800,000 and purchased inventory for $200,000. What basis will Locust Corporation have in each of these assets?

Reference no: EM13259173

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