RGD Corporation Was a C Corporation from Its Inception in 2012

question 59

Essay

RGD Corporation was a C corporation from its inception in 2012 through 2015. However, it elected S corporation status effective January 1, 2016. RGD had $50,000 of earnings and profits at the end of 2015. RGD reported the following information for its 2016 tax year. $$\begin{array} { | r | r | r | r | } \hline \text { Yea } & \begin{array} { r } \text { Gross Receipts(including } \\\text { passive investment } \\\text { income) }\end{array} & \begin{array} { r } \text { Passive } \\\text { imvestment } \\\text { income }\end{array} & \begin{array} { r } \text { Corporate } \\\text { Eamings } \\\text { and Profits } \\\text { (end of year) }\end{array} \\\hline 2016 & \$ 400,000 & \$ 120,000 & \$ 140,000 \\\hline 2017 & \$ 300,000 & \$ 70,000 & \$ 100,000 \\\hline 2018 & \$ 500,000 & \$ 130,000 & \$ 70,000 \\\hline 2019 & \$ 400,000 & \$ 110,000 & \$ 40,000 \\\hline 2020 & \$ 600,000 & \$ 155,000 & \$ 1,000 \\\hline\end{array}$$ What amount of excess net passive income tax is RGD liable for in 2016? (Round your answer for excess net passive income to the nearest thousand)

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Definitions:

Consumer Behavior

The study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.

Reference Groups

Groups that individuals refer to when making purchasing decisions or when evaluating their personal qualities.

Dissociative Reference Group

A group that an individual does not want to associate with, and therefore takes steps to distance themselves from in their purchasing decisions or behaviors.

Family Life Cycle

A series of stages through which a family progresses over time, influencing buying behaviors and marketing strategies.