Clampett, Inc. converted to an S corporation on January 1, 2021. At that time, Clampett, Inc. had cash ($40,000), inventory (FMV $60,000, Basis $30,000), accounts receivable (FMV $40,000, Basis $40,000), and equipment (FMV $60,000, Ba

SWFT Comprehensive Vol 2020
43rd Edition
ISBN:9780357391723
Author:Maloney
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Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 15DQ
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  1. Clampett, Inc. converted to an S corporation on January 1, 2021. At that time, Clampett, Inc. had cash ($40,000), inventory (FMV $60,000, Basis $30,000), accounts receivable (FMV $40,000, Basis $40,000), and equipment (FMV $60,000, Basis $80,000). In 2021, Clampett, Inc. sells its entire inventory for $60,000 (Basis $30,000). Assuming the corporate tax rate is 21% and that Clampett, Inc. had a $20,000 net operating loss carryover from its prior C corporation years. How much built-in gains tax does Clampett, Inc. pay in 2021?

       

    $2,100.

       

    $0.

       

    $10,500.

       

    $10,000.

       

    None of the choices are correct.

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