An S corporation has a recognized built-in gain of $175,000 in 2018 and taxable income of $150,000 determined using C corporation rules. It holds a $50,000 net operating loss carryforward from a C corporation year. There are no earnings and profits from C corporation years. Tax rate is 21%. The built-in gains tax liability is:

a. $21,000.

b. $26,250.

c. $31,500.

d. $36,750.