SEC Corporation Has Been Operating as a C Corporation Since

question 79

Essay

SEC Corporation has been operating as a C corporation since 2016.It elected to become an S corporation, effective January 1, 2019.On December 31, 2018, SEC reported a net unrealized built-in gain of $60,000.In addition to other transactions in 2019, SEC sold inventory it owned at the beginning of 2019 (it did not sell any other assets it owned at the beginning of 2019).At the beginning of the year, the inventory it sold had a fair market value of $30,000 and a FIFO tax basis of $10,000.SEC sold the inventory for $35,000.If SEC had been a C corporation in 2019, its taxable income would have been $100,000.How much built-in gains tax must SEC pay in 2019?

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Definitions:

Presentation Equipment

Tools and devices used during presentations, such as projectors, screens, microphones, and laptops, to aid in delivering content.

Visuals

Graphic elements such as images, charts, and videos used to convey information, illustrate concepts, or enhance communication.

Learning

The acquisition of knowledge or skills through experience, study, or being taught.

Percent

A mathematical term representing a part per hundred, used to describe proportions or compare quantities.