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.

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Definitions:

Statement of Cost

A financial report that details the costs associated with producing goods, often used in manufacturing to assess production expenses.

Raw Material Inventory

Items and inventory that are used in the manufacturing process to create products but have not yet been converted into finished goods.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and profits.

Expenses

The costs incurred in the process of generating revenues, including costs of goods sold, operating expenses, and taxes.