B Corporation elected to convert from C status to S status.B uses the accrual basis.At the time the election takes effect, the records show: $\begin{array} { l }
\text { Basis }&FMV&\text { Gain/Loss }\
\text { Inventory }&\$30,000&\$70,000&\$40,000\
\text { Land/Building }&150,000&750,000&600,000\
\text { Trucks }&25,000&15,000&(10,000)\
\text { Total }&\$205,000&\$835,000&\$630,000
\end{array}$
B's net unrealized built-in gain is

Question

B Corporation elected to convert from C status to S status.B uses the accrual basis.At the time the election takes effect, the records show: $\begin{array} { l  }
\text { Basis }&FMV&\text { Gain/Loss }\
\text { Inventory }&\$30,000&\$70,000&\$40,000\
\text { Land/Building }&150,000&750,000&600,000\
\text { Trucks }&25,000&15,000&(10,000)\
\text { Total }&\$205,000&\$835,000&\$630,000
\end{array}$
 B's net unrealized built-in gain is

Quizplus · Accepted Answer

Net unrealized built-in gain is the excess of the fair market value of the assets over the tax basis of the assets. In this case, the net unrealized built-in gain is $630,000 ($835,000 - $205,000).

B Corporation Elected to Convert from C Status to S