Virginia Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Virginia Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation). Asset Cash Accounts receivable Inventory Land Totals FMV Adjusted Basis $ 21,250 41,500 92,750 $ 21,250 41,500 205,250 186,000 160,000 $ 315,500 $ 454,000 In 2022, Virginia Corporation reported business income of $52,500 (this would have been its taxable income if it were still a C corporation). What is Virginia's built-in gains tax in each of the following alternative scenarios?

Virginia Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Virginia Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation). Asset Cash Accounts receivable Inventory Land Totals FMV Adjusted Basis $ 21,250 41,500 92,750 $ 21,250 41,500 205,250 186,000 160,000 $ 315,500 $ 454,000 In 2022, Virginia Corporation reported business income of $52,500 (this would have been its taxable income if it were still a C corporation). What is Virginia's built-in gains tax in each of the following alternative scenarios?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter17: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 15DQ

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Tempe Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Tempe Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation): Asset Cash Accounts receivable Inventory Land Totals Adjusted Basis $ 23,000 41,800 172,000 41,800 218,000 162,000 126,000 $ 398,800 $ 408,800 FMV $ 23,000 Tempe Corporation's business income for the year was $43,000 (this would have been its taxable income if it were a C corporation). During 2022, Tempe Corporation sold all of the inventory it owned at the beginning of the year for $234,000. Built-in gains tax c. Assume the original facts, except the land was valued at $152,000 instead of $126,000. What is Tempe Corporation's built-in gains tax in 2022?
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Tempe Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Tempe Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation): Asset Adjusted Basis FMV Cash $31,500 $ 31,500 Accounts receivable 46,900 46,900 Inventory 206,000 269,000 Land 196,000 143,000 Totals $ 480, 400 $ 490,400 Tempe Corporation's business income for the year was $51,500 (this would have been its taxable income if it were a C corporation). During 2022, Tempe Corporation sold all of the inventory it owned at the beginning of the year for $ 302,000. a. What is its built-in gains tax in 2022? b. Assume the original facts, except that if Tempe Corporation were a C corporation, its taxable income would have been $8,800. What is its built-in gains tax in 2022?
Tempe Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Tempe Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation): Asset Adjusted Basis FMV Cash $ 27,000 $ 27,000 Accounts receivable 44,200 44,200 Inventory 188,000 242,000 Land 178,000 134,000 Totals $ 437,200 $ 447,200 Tempe Corporation's business income for the year was $47,000 (this would have been its taxable income if it were a C corporation). During 2022, Tempe Corporation sold all of the inventory it owned at the beginning of the year for $266,000. a. What is its built-in gains tax in 2022? b. Assume the original facts, except that if Tempe Corporation were a C corporation, its taxable income would have been $9,800. What is its built-in gains tax in 2022? c. Assume the original facts, except the land was valued at $168,000 instead of…
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