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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