SEC Corporation Has Been Operating as a C Corporation Since

question 51

Essay

SEC Corporation has been operating as a C corporation since 2015. It elected to become an S corporation, effective January 1, 2018. On December 31, 2017, SEC reported a net unrealized built in gain of $10,000. In addition to other transactions in 2018, SEC sold inventory it owned at the beginning of 2018 (it did not sell any other assets it owned at the beginning of 2018). At the beginning of the year, the inventory it sold had a fair market value of $40,000 and a FIFO tax basis of $15,000. SEC sold the inventory for $28,000. If SEC had been a C corporation in 2018, its taxable income would have been $40,000. How much built-in gains tax must SEC pay in 2018? Assume the corporate tax rate is 21%.

Solve systems of linear equations using different methods.

Understand and apply the concept of linear systems in practical contexts, such as break-even analysis.

Solve problems involving rates of change and simple interest.

Interpret and solve problems using matrix notation and operations.

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Definitions:

Home-Organization

The process of organizing and arranging the living space within a home for better functionality and aesthetics.

Farming

The activity or business of growing crops and raising livestock for food, fiber, and other products.

Marginal Product

The additional output that is generated by employing one more unit of a particular input, holding other inputs constant.

Units of Output

The amount of product that a company produces in a given period.