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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Blue Corp. previously operated as a C corporation. At the beginning of 2020, Blue Corp. made a valid S corporation election. At the time of the election, Blue Corp. had accumulated E&P of $20,000 and also owned the following assets: Land A: FMV = $100,000, AB = $50,000 Land B: FMV = $100,000, AB = $105,000 Land C: FMV = $100,000, AB = $5,000 Land D: FMV = $100,000, AB = $200,000 a) If Blue Corp. sells Land A for $130,000 and Land B for $1o00,000 in 2020, what is the amount of Blue Corp.'s built-in gain tax liability? b) If Blue Corp. sells Land A for $130,000 and Land B for $100,000 in 2020, what is the total amount of gain from the sale of Land A and Land B that is allocated to Blue Corp.'s shareholder(s)? %3D %3D %3D %3D %3D
Transcribed Image Text:Blue Corp. previously operated as a C corporation. At the beginning of 2020, Blue Corp. made a valid S corporation election. At the time of the election, Blue Corp. had accumulated E&P of $20,000 and also owned the following assets: Land A: FMV = $100,000, AB = $50,000 Land B: FMV = $100,000, AB = $105,000 Land C: FMV = $100,000, AB = $5,000 Land D: FMV = $100,000, AB = $200,000 a) If Blue Corp. sells Land A for $130,000 and Land B for $1o00,000 in 2020, what is the amount of Blue Corp.'s built-in gain tax liability? b) If Blue Corp. sells Land A for $130,000 and Land B for $100,000 in 2020, what is the total amount of gain from the sale of Land A and Land B that is allocated to Blue Corp.'s shareholder(s)? %3D %3D %3D %3D %3D
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