Which of the Following S Corporations Would Be Subject to the Excess

question 23

Multiple Choice

Which of the following S corporations would be subject to the excess net passive income tax?

• A) An S corporation that never operated as a C corporation.
• B) An S corporation that has previously distributed all earnings and profits from prior C corporation years.
• C) An S corporation with no earnings and profits from prior C corporation years and with passive investment income that exceeds 30% of its gross receipts.
• D) An S corporation with $2,000 of earnings and profits from prior C corporation years and with passive investment income that equals 22% of its gross receipts.
• E) None of the choices are correct.