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On February 7, 2024, Snow Corporation, a cash basis calendar year C corporation, elected S...

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Accounting

On February 7, 2024, Snow Corporation, a cash basis calendar year C corporation, elected S status effective for January 1, 2024. On January 1, Snow Corporations balance sheet included the following assets:

Item

Adjusted Basis

Fair Market Value

Inventory

17,000

35,000

Land

45,000

40,000

Equipment

50,000

44,000

During the current year, Snow Corporation sold all its inventory for $41,000. It also sold the equipment for $31,000 (Snow Corporation did not claim any more depreciation on the equipment this year, so its basis at the time of sale is $50,000). Snow Corporations taxable income limitation is $26,000 for the current year. Compute Snow Corporations built-in gains tax.

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