Tempe Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporationbecame effective. Tempe Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have anyearnings and profits from its prior years as a C corporation):AssetCashAccounts receivableInventoryLandTotalsAdjusted Basis$ 23,00041,800172,00041,800218,000162,000126,000$ 398,800 $ 408,800FMV$ 23,000Tempe Corporation's business income for the year was $43,000 (this would have been its taxable income if it were a Ccorporation).During 2022, Tempe Corporation sold all of the inventory it owned at the beginning of the year for $234,000.Built-in gains taxc. Assume the original facts, except the land was valued at $152,000 instead of $126,000. What is Tempe Corporation's built-in gainstax in 2022?

Built in tax is a special federal tax imposed on an S corporation after conversion from a C corp. An…

Answered: c. Assume the original facts, except…

c. Assume the original facts, except the land was valued at $152,000 instead of $126,000. What is Tempe Corporation's built-in gains tax in 2022?

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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Question

Tempe Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation
became effective. Tempe Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have any
earnings and profits from its prior years as a C corporation):
Asset
Cash
Accounts receivable
Inventory
Land
Totals
Adjusted Basis
$ 23,000
41,800
172,000
41,800
218,000
162,000
126,000
$ 398,800 $ 408,800
FMV
$ 23,000
Tempe Corporation's business income for the year was $43,000 (this would have been its taxable income if it were a C
corporation).
During 2022, Tempe Corporation sold all of the inventory it owned at the beginning of the year for $234,000.
Built-in gains tax
c. Assume the original facts, except the land was valued at $152,000 instead of $126,000. What is Tempe Corporation's built-in gains
tax in 2022?

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