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 = $50,000Land B: FMV = $100,000, AB = $105,000Land C: FMV = $100,000, AB = $5,000Land D: FMV = $100,000, AB = $200,000If Blue Corp. sells Land A for $130,000 and Land B for $100,000 in 2020, what is the amount of Blue Corp.'s built-in gain tax liability?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)?

Sell land A=130000 B=100000 Total =230000 Acquised cost AB =50000+105000 that =155000 Blue corps…

Answered: Blue Corp. previously operated as a C…

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

If Blue Corp. sells Land A for $130,000 and Land B for $100,000 in 2020, what is the amount of Blue Corp.'s built-in gain tax liability?

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)?

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