Neal Corporation Was Initially Formed as a C Corporation with a Calendar

question 58

Essay

Neal Corporation was initially formed as a C corporation with a calendar year end. Neal elected S corporation status, effective January 1, 2016. On December 31, 2015, Neal Corp. reported earnings and profits of $150,000. Beginning in 2016, Neal Corp. reported the following information. Does Neal Corp.'s S election terminate due to excess net passive income? If so, what is the effective date of the termination?

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Definitions:

Normative Statement

A statement expressing a value judgment about what ought to be, rather than stating objective facts or describing what currently exists.

Grade Point Average

A numerical calculation representing the average value of the accumulated final grades earned over time, used in schools and universities.

Positive Statement

A factual statement that can be tested and validated, describing the world as it is.

General State

A term potentially referring to the overall condition of a system or entity, but is not a standard term in economics or related fields. NO.