RGD Corporation Was a C Corporation from Its Inception in 2011

question 54

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.
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:

Insanity

A legal term for a mental disorder so severe that it prevents a person from understanding the difference between right and wrong or from being able to control their actions.

Systematic Desensitization

A behavioral therapy technique used to help individuals overcome phobias and anxieties by gradually exposing them to the feared object or context without any danger.

Phobia

An intense, irrational fear of a specific object, situation, or activity that leads to significant anxiety and avoidance behaviors.

Free Association

A psychoanalytic therapy technique where patients verbalize all thoughts that come to mind without censorship, used to explore the unconscious mind.