Virginia Corporation is a calendar-year corporation. At the beginning of 2024, its election to be taxed as an S corporation became effective. Virgin
Virginia Corporation is a calendar-year corporation. At the beginning of 2024, its election to be taxed as an S corporation became effective. Virginia Corp.’s balance sheet at the end of 2023 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation).
\r\n\r\n Asset \r\n | \r\n\r\n Adjusted basis \r\n | \r\n\r\n FMV \r\n | \r\n
\r\n Cash \r\n | \r\n\r\n $20,000 \r\n | \r\n\r\n $20,000 \r\n | \r\n
\r\n Accounts receivable \r\n | \r\n\r\n 40,000 \r\n | \r\n\r\n 40,000 \r\n | \r\n
\r\n Inventory \r\n | \r\n\r\n 90,000 \r\n | \r\n\r\n 200,000 \r\n | \r\n
\r\n Land \r\n | \r\n\r\n 150,000 \r\n | \r\n\r\n 175,000 \r\n | \r\n
\r\n Totals \r\n | \r\n\r\n $300,000 \r\n | \r\n\r\n $435,000 \r\n | \r\n
\r\n
In 2024, Virginia Corp. reported business income of $50,000 (this would have been its taxable income if it were still a C corporation). What is Virginia’s built-in gains tax in each of the following alternative scenarios?