Young Corp, a corporation that had been in existence since 2014, elected Subchapter S status on January 2, 2017. At the time of its election it had three assets. Asset #1 had been acquired in 2014 and had an adjusted basis of $600,000 and a FMV at the time of the Subchapter S election equal to $1,100,000. In 2015, Young Corp acquired Asset #2 and Asset #3 and had they had an adjusted basis equal to $550,000 and $800,000, respectively. At the time of the Subchapter S election, the FMV of the two assets were $350,000 (Asset #2) and $950,000 (Asset #3)

a) If Young Corp were to sell Asset #1 on March 3, 2019 for $1,300,000, what are the consequences to Young Corp and its sole shareholder Smith?

b) What if the corporation sold Asset #1 for $1,000,000?

c) If Young Corp were to sell Asset #3 on March 3, 2019 for $900,000, what are the consequences to Young Corp and its sole shareholder Smith?

d) What if the corporation sold Asset #3 for $1,275,000?

Answer rating: 100% (QA)

If Young Corp were to sell Asset 1 on March 3 2019 for 1300000 there would be no consequences to ... View the full answer