A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to S status on February 14. By the end of the year, $60,000 of these receivables have been collected. Calculate any built- in gains tax, assuming that there is sufficient taxable income.

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The built-in gains tax applies to the net recognized built-in gain during the recognition period after a C corporation converts to S status. The $60,000 collected from the accounts receivable, which was earned while the corporation was a C corporation but collected as an S corporation, is subject to the built-in gains tax. Assuming a corporate tax rate of 21%, the tax on the $60,000 is $12,600 (0.21 * $60,000).

A Cash Basis Calendar Year C Corporation Reports $100,000 of Accounts