Mock Corporation Converts to S Corporation Status in 2016

question 34

Multiple Choice

Mock Corporation converts to S corporation status in 2016. Mock used the LIFO inventory method in 2015 and had a LIFO inventory of $435,000 (FIFO value of $550,000) on the date of the S election. How much tax must be added to Mock's 2015 corporate tax liability, assuming that Mock is subject to a 35% tax rate.

• A)$0
• B)$10,062.50
• C)$40,250
• D)$115,000
• E)Some other amount

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Definitions:

Line-and-staff Organization

An organizational structure that combines direct, line authority with specialized, staff support functions and personnel.

Line Organization

A direct and clear line of command within an organization, from the top management to the lowest rank, characterized by direct supervision and clear responsibilities.

Staff Relationship

The dynamics and interactions between employees within an organization, influencing workplace environment and productivity.

Plant Manager

An individual responsible for overseeing all operations and activities within a manufacturing plant or factory, including production, staffing, and safety.