Claude purchased raw land three years ago for $2,500,000 to develop into lots and sell to individuals planning to build their dream homes. claude intended to treat this property as inventory, like his other development properties. before completing the development of the property, however, he decided to contribute it to south peak investors llc when it was worth $3,700,000, in exchange for a 10 percent capital and profits interest. south peak’s strategy is to hold land for investment purposes only and then sell it later at a gain. a. if south peak sells the property for $3,890,000 four years after claude’s contribution, how much gain or loss is recognized and what is its character? {hint: see §724.}

You are working on a bid to build two city parks a year for the next three years. this project requires the purchase of $249,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the three-year project life. ignore bonus depreciation. the equipment can be sold at the end of the project for $115,000. you will also need $18.000 in net working capital for the duration of the project. the fixed costs will be $37000 a year and the variable costs will be $148,000 per park. your required rate of return is 14 percent and your tax rate is 21 percent. what is the minimal amount you should bid per park? (round your answer to the nearest $100) (a) $214,300 (b) $214,100 (c) $212,500 (d) $208,200 (e) $208,400