Mock Corporation Converts to S Corporation Status in 2014

question 96

Multiple Choice

Mock Corporation converts to S corporation status in 2014. Mock used the LIFO inventory method in 2013 and had a LIFO inventory of $435,000 (FIFO value of $550,000) on the date of the S election. How much tax must be added to Mock's 2013 corporate tax liability, assuming that Mock is subject to a 35% tax rate.

• A) $0
• B) $10,062.50
• C) $40,250
• D) $115,000
• E) Some other amount

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Definitions:

MSTR

Acronym for "Mean Square Between Treatments," used in analysis of variance (ANOVA) to assess how different groups' means vary from the overall mean.

MSE

Mean Squared Error, a measure of the average of the squares of the errors or deviations from the estimated values versus the actual values.

Mean Square

A statistic used in contexts such as ANOVA, representing the average of squares of a set of numbers.

Degrees of Freedom

A statistical property that describes the number of values in the final calculation of a statistic that are free to vary.