RGD Corporation Was a C Corporation from Its Inception in 2011

question 28

Essay

RGD Corporation was a C corporation from its inception in 2011 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. $$\begin{array} { | l | r | } \hline \text { Description } & \text { Amount } \\\hline \text { Consulting revenue } & \$ 130,000 \\\hline \text { Salary to owners } & ( 50,000 ) \\\hline \text { Employee wages } & ( 40,000 ) \\\hline \text { Depreciation expense } & ( 8,000 ) \\\hline \text { Interest income } & 50,000 \\\hline \text { Dividend income } & 40,000 \\\hline \text { Overall net income } & \$ 122,000 \\\hline\end{array}$$ 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:

Recall

The process of retrieving information stored in the memory without the aid of cues.

Reconstruction

The process of assembling or rebuilding mental representations based on memory, influences, and expectations.

Short-Term Memory

The component of memory that temporarily holds a limited amount of information for a short period of time.

Implicit Memory

Memory that influences thoughts or behaviors without conscious awareness, involving learned skills and conditioned responses.