Author Question: Worthy Corporation elected to be taxed as an S corporation on January 1, of last year, effective ... (Read 85 times)

elizabeth18 · **on:** Sep 13, 2020

Worthy Corporation elected to be taxed as an S corporation on January 1, of last year, effective last year. It had previously been a C corporation. On the effective date of the S election, Worthy had land with a $70,000 basis and a $210,000 FMV. No net unrealized losses exist on the date of the S corporation election. The land is sold this year for $250,000. The tax result of the sale by Worthy is
◦ no gain or loss recognized.
◦ a gain of $180,000, none of which is subject to the built-in gains tax.
◦ a gain of $180,000, all of which is subject to the built-in gains tax.
◦ a gain of $140,000 subject to the built-in gains tax and passes though to shareholders, plus a $40,000 gain subject to on the regular S-corporation pass-through rules.

spencer.martell · **Reply #1 on:** Sep 13, 2020

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