Mock Corporation Converts to S Corporation Status in 2014

question 96

Multiple Choice

Mock Corporation converts to S corporation status in 2014. Mock used the LIFO inventory method in 2013 and had a LIFO inventory of $435,000 (FIFO value of $550,000) on the date of the S election. How much tax must be added to Mock's 2013 corporate tax liability, assuming that Mock is subject to a 35% tax rate.

• A) $0
• B) $10,062.50
• C) $40,250
• D) $115,000
• E) Some other amount

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