lampett, Incorporated, converted to an S corporation on January 1, 2020. At that time, Clampett, Incorporated, 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, Incorporated, sells its entire inventory for $60,000 (basis $30,000). Assume the corporate tax rate is 21 percent and that Clampett, Incorporated, had a $20,000 net operating loss carryover from its prior C corporation years. How much built-in gains tax does Clampett, Incorporated, pay in 2021?
lampett, Incorporated, converted to an S corporation on January 1, 2020. At that time, Clampett, Incorporated, 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, Incorporated, sells its entire inventory for $60,000 (basis $30,000). Assume the corporate tax rate is 21 percent and that Clampett, Incorporated, had a $20,000 net operating loss carryover from its prior C corporation years. How much built-in gains tax does Clampett, Incorporated, pay in 2021?
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 15DQ
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Clampett, Incorporated, converted to an S corporation on January 1, 2020. At that time, Clampett, Incorporated, had cash ($40,000), inventory (FMV $60,000, basis $30,000),
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Transcribed Image Text:ssignment i
You are considering an investment in Fields and Struthers, Incorporated, and want to evaluate the firm's free cash flow. From the
income statement, you see that Fields and Struthers earned an EBIT of $62 million, had a tax rate of 21 percent, and its depreciation
expense was $5 million. Fields and Struthers's gross fixed assets increased by $32 million from last year to this year. The firm's current
assets increased by $20 million and spontaneous current liabilities increased by $12 million.
Calculate Fields and Struthers's NOPAT.
Note: Enter your answer in millions of dollars rounded to 2 decimal places. (i.e., Enter 5,500,000 as 5.50.)
NOPAT
Operating cash flow
43.4 million
Calculate Fields and Struthers's operating cash flow.
Note: Enter your answer in millions of dollars rounded to 2 decimal places. (i.e., Enter 5,500,000 as 5.50.)
Investment in operating capital
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million
Calculate Fields and Struthers's investment in operating capital.
Note: Enter your answer in millions of dollars. (i.e., Enter 10,000,000 as 10.)
million
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