RGD Corporation Was a C Corporation from Its Inception in 2013

question 72

Essay

RGD Corporation was a C corporation from its inception in 2013 through 2017.However,it elected S corporation status effective January 1,2018.RGD had $50,000 of earnings and profits at the end of 2017.RGD reported the following information for its 2018 tax year.
$\begin{array}{lrr} \text { Description } & \text { Amount } \\\text { Consulting revenue } & \$ 9,000 \\\text { Salary to owners } & (40,000) \\\text { Employee wages } & (30,000) \\\text { Depreciation expense } & (5,000) \\\text { Municipal bond interest } & 6,000 \\\text { Interest income } & 42,000 \\\text { Dividend income } & \underline {25,000 }\\\text { Overall net income } & \underline {\$ 97,000} \\\end{array}$ What amount of excess net passive income tax is RGD liable for in 2018? Assume the corporate tax rate is 21%.(Round your answer for excess net passive income to the nearest thousand).

---

Definitions:

Particles

The small, localized physical entities that make up the structure of matter, ranging from elementary particles to atoms and molecules.

Ordered State

A condition of a system in which its components are arranged in a well-organized pattern or structure, often resulting in reduced entropy.

Solids

Materials in the state of matter characterized by fixed shape and volume, with particles closely packed in a regular pattern.

Pure Substances

Materials that are composed of only one type of atom or molecule, exhibiting consistent physical and chemical properties throughout the sample.