7.

a. Alleghany Corporation reports the following results:

Service income $80,000, Dividend income $60,000, Interest income $120,000,

Passive-income related expenses $40,000, Other expenses $100,000.

At the end of the year, Alleghany's C Corp E&P was $100,000. What is

Alleghany's excess net passive income and excess net passive income tax?

b. Maine Corporation elects S status effective beginning year 2019. On January 1,

2019, Maine's assets were appraised as follows:

Adjusted Basis Fair Market Value

Cash 16,010 16,010

Accounts Receivable 0 55,400

Inventory 70,000 90,000

Investment in land 110,000 195,000

Building 220,000 275,000

Goodwill 0 93,000

In each of the following independent situations, calculate any built-in gains tax. C

corporation taxable income would have been $100,000.

i. Crew collects $40,000 of the accounts receivable and sells 80% of the inventory

for $99,000.

ii. Crew sells the land held for investment for $203,000.

iii. The building is sold for $270,000.