Wood Corporation was a C corporation in 2019 but elected to be taxed as an S corporation

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Wood Corporation was a C corporation in 2019 but elected to be taxed as an S corporation in 2020. At the end of 2019, its earnings and profits were $15,500. The following table reports Wood Corp.’s (taxable) income for 2020 (its first year as an S corporation).


Wood Corporation 

Income Statement 

December 31, 2020

Sales revenue

$150,000

Cost of goods sold

(35,000)

Salary to owners

(60,000)

Employee wages

(50,000)

Depreciation expense

(4,000)

Miscellaneous expenses

(4,000)

Interest income

8,000

Qualified dividend income

2,000

Overall net income

$7,000


What is Wood Corporation’s excess net passive income tax for 2020?

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Related Book For  book-img-for-question

Taxation Of Individuals And Business Entities 2021

ISBN: 9781260247138

12th Edition

Authors: Brian Spilker, Benjamin Ayers, John Barrick, Troy Lewis, John Robinson, Connie Weaver, Ronald Worsham

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