For the current tax year, S corporation BVX Inc. has $300,000 gross receipts from business, $15,000 net rental real estate loss, $4,000 portfolio interest income, $10,000 depreciation on equipment, and $2,000 Section 179 deduction on equipment purchased. BVX paid $40,000 in salaries and wages including compensation to officers and had $110,000 in other business deductions. How much ordinary business income is reported on the S corporation return for BVX Inc.? a) $180,000 b) $127,000 c) $140,000 d) $138,000.

XRC Inc., a former C corporation, elected S corporation status two years ago. The company is on a calendar year fiscal year. On the first day of the S election, XRC owned a special piece of equipment with a $10,000 FMV and basis of $7,000. During the current tax year, XRC sold this equipment for $11,000. Assume there are no other capital gains or losses for XRC during the current tax year. This is a two-part question. a) $630; $3,370 b) $840; $4,000 ) $630; $4,000 d) $840; $3,370
Question 1: What amount of built-in gains tax will XRC Inc. pay due to this sale?
Question 2: What total amount of capital gains will XRC pass through to its shareholders due to this sale?
a) $630; $3370
b) $840; $4,000
c) $630; $4,000
d) $840; $3,370