Problem 13-44 (LO. 4) Clay Corporation has been an S corporation since its incorporation 10 years ago. During the first 3 years of operations, it incurred total losses of $250,000. Since then, Clay has generated earnings of approximately $180,000 each year. None of the earnings have been distributed to the three equal shareholders, Claire, Lynn, and Todd, because the corporation has been in an expansion mode. At the beginning of the current year, Claire sells her stock to Nell for $400,000. Nell has reservations about the utility of the S election Therefore, Lynn, Todd, and Nell are discussing whether the election should be continued. They expect the earnings to remain at approximately $180,000 each year. However, because they perceive that the expansion period is over and Clay has adequate working capital, they may start distributing the earnings to the shareholders. All of the shareholders are in the 32% tax bracket and qualified dividends are taxed at 15% If required round your final answers to the nearest dollar. a. Complete the statement below which outlines an S corporation revocation. If the S election is voluntarily terminated, Clay Corporation cannot make another election for a . The revocation of the election requires consent by shareholder(s). b. Assume the S election is maintained. The annual earnings of $180,000 are distributed to the shareholders which result in a tax liability (associated with the distribution only) for all the shareholders is C. Conversely, assume the S election is revoked. The corporate tax liability is The tax liability for all of the shareholders on the dividend distribution, assuming the dividends are qualified dividends is d. The total tax liability would be e. Assuming all the earnings are to be distributed, the S election should be for an S corporation and for a C corporation