An S corporation may be subject to the following tax.

Question

Quizplus · Accepted Answer

An S corporation that was once a C corporation and has converted to an S corporation may be subject to a built-in gains tax on the net recognized built-in gains that are realized during the first 5-year period after the conversion. This tax is designed to prevent C corporations from converting to S corporations and avoiding the corporate-level tax on built-in gains. S corporations are not subject to federal income tax or foreign earnings tax, and the alternative minimum tax does not apply to S corporations.

An S Corporation May Be Subject to the Following Tax