Required information [The following information applies to the questions displayed below.] Virginia Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Virginia 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 Accounts receivable Cash Adjusted Basis $ 21,250 41,500 92,750 160,000 FMV $ 21,250 41,500 205,250 186,000 Inventory Land Totals $ 315,500 $ 454,000 In 2022, Virginia Corporation reported business income of $52,500 (this would have been its taxable income if it were still a C corporation). What is Virginia's built-in gains tax in each of the following alternative scenarios? b. During 2022, Virginia Corporation sold inventory it owned at the beginning of the year for $103,250. Assume the original facts except Virginia Corporation had a net operating loss carryover of $25,000 from its time as a C corporation.
Required information [The following information applies to the questions displayed below.] Virginia Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Virginia 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 Accounts receivable Cash Adjusted Basis $ 21,250 41,500 92,750 160,000 FMV $ 21,250 41,500 205,250 186,000 Inventory Land Totals $ 315,500 $ 454,000 In 2022, Virginia Corporation reported business income of $52,500 (this would have been its taxable income if it were still a C corporation). What is Virginia's built-in gains tax in each of the following alternative scenarios? b. During 2022, Virginia Corporation sold inventory it owned at the beginning of the year for $103,250. Assume the original facts except Virginia Corporation had a net operating loss carryover of $25,000 from its time as a C corporation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required information
[The following information applies to the questions displayed below.]
Virginia Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation
became effective. Virginia 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).
Cash
Asset
Accounts receivable
Inventory
Land
Totals
Adjusted
Basis
$ 21,250
41,500
92,750
160,000
FMV
$ 21,250
41,500
205,250
186,000
$ 315,500
$ 454,000
In 2022, Virginia Corporation reported business income of $52,500 (this would have been its taxable income if it were still
a C corporation).
What is Virginia's built-in gains tax in each of the following alternative scenarios?
b. During 2022, Virginia Corporation sold inventory it owned at the beginning of the year for $103,250. Assume the original facts
except Virginia Corporation had a net operating loss carryover of $25,000 from its time as a C corporation.
Built-in gains tax](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad18cd8b-faab-465f-9cbc-e168ea85b1ef%2Fc512a0c7-9540-4fdc-ab60-b2a15dca1f8c%2F1scmo09_processed.jpeg&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
Virginia Corporation is a calendar-year corporation. At the beginning of 2022, its election to be taxed as an S corporation
became effective. Virginia 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).
Cash
Asset
Accounts receivable
Inventory
Land
Totals
Adjusted
Basis
$ 21,250
41,500
92,750
160,000
FMV
$ 21,250
41,500
205,250
186,000
$ 315,500
$ 454,000
In 2022, Virginia Corporation reported business income of $52,500 (this would have been its taxable income if it were still
a C corporation).
What is Virginia's built-in gains tax in each of the following alternative scenarios?
b. During 2022, Virginia Corporation sold inventory it owned at the beginning of the year for $103,250. Assume the original facts
except Virginia Corporation had a net operating loss carryover of $25,000 from its time as a C corporation.
Built-in gains tax
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