Worthy Corporation Elected to Be Taxed as an S Corporation

question 1516

Multiple Choice

Worthy Corporation elected to be taxed as an S corporation on January 1, of last year, effective last year. It had previously been a C corporation. On the effective date of the S election, Worthy had land with a $70,000 basis and a $210,000 FMV. No net unrealized losses exist on the date of the S corporation election. The land is sold this year for $250,000. The tax result of the sale by Worthy is

• A) a gain of $180,000, none of which is subject to the built- in gains tax.
• B) a gain of $140,000 subject to the built- in gains tax and passes though to shareholders, plus a $40,000 gain subject to the regular S corporation pass- through rules.
• C) a gain of $180,000, all of which is subject to the built- in gains tax.
• D) no gain or loss recognized.

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Definitions:

Individualistic Cultures

Societies that value the independence, autonomy, and personal achievements of its members over group goals.

Collectivist Cultures

are societies that prioritize the group over the individual, emphasizing interdependence, cooperation, and social harmony.

Self-Esteem

An individual's overall subjective evaluation of their own worth.

Collectivist Cultures

Societies in which individuals prioritize the needs and goals of the group over personal desires or ambitions.