If a city government gives a piece of land to a corporation, does the corporation need to pay tax on the land?
Posted on May 20, 2009 by admin
Jack S asked:
What is the related IRCs?
Please do not just answer yes or no, show me some prove.
Thanks!
What is the related IRCs?
Please do not just answer yes or no, show me some prove.
Thanks!
Yes it’s taxable. The exclusion of taxes paid by the recipient of a gift only applies to bona-fide gifts between individuals. If a city were to give away land there would have to be some expectation of some benefit to the city in return, even if that benefit were only the return of the land to the real estate tax rolls. As such it could not be classified as a gift and therefore would be taxable to the recipient as income.
TITLE 26, Subtitle A, CHAPTER 1, Subchapter B, PART I, § 61 (Gross income defined)
TITLE 26, Subtitle A, CHAPTER 1, Subchapter A, PART II, § 11 (Tax on Corporations)