Clampett, Incorporated, Converted to an S Corporation on January 1

question 144

Multiple Choice

Clampett, Incorporated, converted to an S corporation on January 1, 2020. At that time, Clampett, Incorporated, had cash ($40,000) , inventory (FMV $60,000, basis $30,000) , accounts receivable (FMV $40,000, basis $40,000) , and equipment (FMV $60,000, basis $80,000) . What is Clampett, Incorporated's built-in gain or loss on January 1, 2020?

• A)$30,000 net built-in gain
• B)$10,000 net built-in gain
• C)$0 net built-in gain
• D)$20,000 net built-in loss
• E)None of the choices are correct.