Clampett, Inc. converted to an S corporation on January 1, 2018. At that time, Clampett, Inc. had cash ($40,000), inventory (FMV $60,000, Basis $30,000), accounts receivable (FMV $40,000, Basis $40,000), and equipment (FMV $60,000, Basis $80,000). In 2019, Clampett, Inc. sells its entire inventory for $60,000 (Basis $30,000). Assuming the corporate tax rate is 21%. Clampett, Inc.'s taxable income in 2019 would have been $1,000,000 if it had been a C corporation. How much built-in gains tax does Clampett, Inc. pay in 2019?

$10,500.

$10,000.

$2,100.

$0.

None of the choices are correct.

Clampett, Inc. converted to an S corporation on January 1, 2018. At that time, Clampett, Inc. had cash ($40,000), inventory (FMV $60,000, Basis $30,000), accounts receivable (FMV $40,000, Basis $40,000), and equipment (FMV $60,000, Basis $80,000). In 2019, Clampett, Inc. sells its entire inventory for $60,000 (Basis $30,000). Assuming the corporate tax rate is 21% and that Clampett, Inc. had a $20,000 net operating loss carryover from its prior C corporation years. How much built-in gains tax does Clampett, Inc. pay in 2019?

$10,500.

$10,000.

$2,100.

$0.

None of the choices are correct.

Which of the following statements is correct regarding S corporation estimated taxes?

S corporations never pay estimated taxes.

S corporations with a federal income tax liability of $500 due to the built-in gains tax or excess net passive income tax must pay estimated taxes.

S corporations that owe $5,000 in LIFO recapture tax only must pay estimated taxes.

S corporations with a federal income tax liability of $100 due to the excess net passive income tax must pay estimated taxes.

None of the choices are correct.