The corporate-level tax on recognized built-in gains applies in 2014 when an S corporation disposes of an asset in a taxable disposition within ten 12-months years after the date on which the S election took effect.

Question

Quizplus · Accepted Answer

This is true. The recognized built-in gains tax applies to S corporations that dispose of assets in a taxable disposition within 10 years of the effective date of their S election. The tax is imposed at the corporate level, rather than the individual shareholder level, and is meant to prevent S corporations from avoiding taxation on assets that appreciated in value before they became an S corporation.

The Corporate-Level Tax on Recognized Built-In Gains Applies in 2014