An S corporation converted from a C corporation in 20X2 has the following: Built-in gains of...

An S corporation converted from a C corporation in 20X2 has the following: Built-in gains of $20,000 Taxable income, computed as if the corporation were a C corporation of $30,000 What is the built-in gains tax?

A. $3,000

B. $4,500

C. $7,000

D. $10,500

Solutions

Expert Solution

Answer is option C $7000

built-in gains tax rate = 35%

35% is multiplied by least of 20000 and 30000

Therefore,

built-in gains tax = 20000*35% = 7000

ekkarill92 answered 2 years ago

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