Yates Corporation Elects S Status,effective for Current Calendar Tax Year

question 71

Multiple Choice

Yates Corporation elects S status,effective for current calendar tax year.Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1.The asset is sold at the end of the year 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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