Pacific, Inc. is a calendar-year S corporation that was a C corporation from 1990-2021 when it made
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Question:
Pacific, Inc. is a calendar-year S corporation that was a C corporation from 1990-2021 when it made its first S corporation election effective for January 1, 2022. At the end of 2022, Pacific does not have any C corporation earnings and profits. Pacific does not have any loss carryforwards from C years. Pacific has always used the accrual method of tax accounting. Assume that Section 1375 does not apply. Information about Pacific for 2022 is as follows:
- Net unrealized built-in gain at beginning of year $ 1,000,000
- Recognized built-in gains for the year 250,000
- Recognized built-in losses for the year 50,000
- Taxable income as if a C corp. taking into account the above items 150,000
Required:
A. Compute Pacific's entity-level tax for 2022 (assuming it is 2023), if any, taking account of Section 1374.
B. What carry overs, if any, exist? EXPLAIN.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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