Yates Corporation Elects S Status,effective for Calendar Year 2015

question 70

Multiple Choice

Yates Corporation elects S status,effective for calendar year 2015.Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1,2015.The asset is sold at the end of 2015 for $130,800.What amount must Mark Farris,a 60% owner and subject to a 15% income tax rate,pay,if any?

• A)$5,358
• B)$12,642
• C)$21,070
• D)$35,718

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Definitions:

Not a Merchant

This term indicates an individual or entity that is not engaged in the buying and selling of goods or services, typically within the context of commercial law.

Reasonable Time

A legal term referring to a period of time that is fairly appropriate under the circumstances to perform a particular act or fulfill a duty.

Revoke Acceptance

The right of a party to reject goods or services previously accepted, typically due to the discovery of defects or the nonconformity of the goods or services with contractual terms.

Nonconforming Goods

Products that fail to meet the quality, design specifications, or performance standards as outlined in a purchase contract.