MWC Is a C Corporation That Uses the Accrual Method

question 64

Essay

MWC is a C corporation that uses the accrual method of accounting. MWC made an S election, effective January, 1 of 2014. The following assets were owned by MWC on December 31, 2013. $$\begin{array} { | l | r | r | } \hline { \text { Asset } } & \begin{array} { c } \text { Fair Market } \\\text { Value (FMV) }\end{array} & \begin{array} { c } \text { Adjusted basis } \\\text { (AB) }\end{array} \\\hline \text { Cash } & \$ 40,000 & \$ 40,000 \\\hline \text { Accounts receivable } & 15,000 & 15,000 \\\hline \text { Inventory (FIFO) } & 20,000 & 25,000 \\\hline \text { Land } & \underline { 125,000 } & \underline { 100,000 } \\\hline \text { Totals } & \$ 200,000 & \$ 180,000 \\\hline\end{array}$$ What is MWC's net unrealized built-in gain when it converts to an S corporation on January 1, 2014?

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Definitions:

Lung

A pair of respiratory organs located in the chest, responsible for gas exchange between the air and blood.

Blood Institute

An institution or part of an institution that focuses on research, diagnosis, and treatment of blood-related disorders.

Coronary Artery Disease

A heart condition characterized by the narrowing or blockage of the coronary arteries due to plaque build-up, limiting blood flow to the heart muscle.

CAD

Coronary Artery Disease, a condition where the heart's blood vessels, the coronary arteries, are narrowed or blocked, leading to heart problems like chest pain or heart attacks.