Neal Corporation was initially formed as a C corporation with a calendar year end. Neal...
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Neal Corporation was initially formed as a C corporation with a calendar year end. Neal elected S corporation status, effective January 1, 2015. On December 31, 2014, Neal Corp. reported earnings and profits of $150,000. Beginning in 2015, Neal Corp. reported the following information. Does Neal Corp.'s S election terminate due to excess net passive income? If so, what is the effective date of the termination?
| Year | Gorss receipts (including passive investment income) | Passive investment income | Corporate earnings and profits ( End of the Year ) |
| 2015 | $400000 | $120000 | $140000 |
| 2016 | 300000 | 70000 | 100000 |
| 2017 | 500000 | 130000 | 70000 |
| 2018 | 400000 | 110000 | 40000 |
| 2019 | 600000 | 155000 | 1000 |
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