Yates Corporation Elects S Status, Effective for Calendar Year 2014

question 70

Multiple Choice

Yates Corporation elects S status, effective for calendar year 2014. Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1, 2014. The asset is sold at the end of 2014 for $130,800. What amount must Mark Farris, a 60% owner and subject to a 15% income tax rate, pay, if any?

• A) $5,358
• B) $12,642
• C) $21,070
• D) $35,718

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Definitions:

Burnout

A state of emotional, physical, and mental exhaustion caused by excessive and prolonged stress, often related to work.

General Adaptation Syndrome

A three-stage response (alarm, resistance, exhaustion) that the body goes through when exposed to stress.

Major Life Events

Significant occurrences in a person's life that have the capacity to alter the course of life significantly, often requiring considerable adjustment.

Catastrophes

Extreme and sudden disasters or events causing significant damage or suffering.