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

question 67

Multiple Choice

Clampett, Incorporated, converted to an S corporation on January 1, 2020. At that time, Clampett, Incorporated, had cash ($56,000) , inventory (FMV $76,000, basis $38,000) , accounts receivable (FMV $56,000, basis $56,000) , and equipment (FMV $76,000, basis $96,000) . In 2021, Clampett, Incorporated, sells its entire inventory for $76,000 (basis $38,000) . Assume the corporate tax rate is 21 percent. Clampett, Incorporated's taxable income in 2021 would have been $1,000,000 if it had been a C corporation. How much built-in gains tax does Clampett, Incorporated, pay in 2021?

• A)$13,860
• B)$18,000
• C)$3,780
• D)$0
• E)None of the choices are correct.

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