Identify Which of the Following Statements Is True

question 50

Multiple Choice

Identify which of the following statements is true.

• A)Beach Corporation, an S corporation, has gross receipts of $240,000; taxable income of $120,000; passive investment income of $100,000; and expenses directly attributable to the passive investment income of $20,000. The corporation's excess net passive income is $32,000.
• B)The built-in gains tax applicable to S corporations can be avoided if the property is held for ten years.
• C)An S corporation generally will not owe the built-in gains tax if the corporation has never been a C corporation.
• D)All of the above are true.

---

Definitions:

Complaining Shareholders

Shareholders who express dissatisfaction with management or company actions, often leading to lawsuits or demands for changes.

Class Action

A legal proceeding in which one or more plaintiffs file a lawsuit on behalf of a larger group of people who are similarly affected.

Wrongful Act

An act that is illegal or immoral, leading to legal liability or moral condemnation.

Similarly Affected

A phrase used to describe individuals or entities that experience the same or similar impacts from an event or action.