BWI holds real estate for investment at the time of its S election. Its S election is effective January 1 of the tax year specified for the exam. During that same tax year, it sells land for $915,000 less 10% costs with a basis of $300,000. Installment payments are made of $165,000 in the same tax year, $150,000 in the next tax year, $150,000 in Year 3, $450,000 in Year 4. BWI's income from operations was $300,000 in Year 1, a loss of $150,000 in Year 2, income of $450,000 in Year 3, and income of $600,000 in Year 4.

a) In Year 2, BWI will owe no built-in gain tax under 1374(d)(2)(a).

b) In Year 3, BWI will owe built-in gain tax based on $150,000 collected times 57.21% gross profit percentage times 35% or $30,035.

c) In Year 3, BWI will owe twice as much built-in gain tax as answer B or $60,070.

d) A and B

e) A and C