The S corporation status would terminate at the beginning of 2020 for which of the following?
A. Incorporated in 1997. First year of S status was 2015. Passive investment income equaled 29% of gross receipts in 2017, 27% in 2018, and 25% in 2019. Subchapter C earnings and profits were $10,000 at the end of each year.
B. Incorporated in 1997. First year of S status was 2015. Earnings and profits from C corporation tax years of $10,000. In 2017, passive investment income equaled 35% of gross receipts. The corporation had no passive investment income in prior or later years.
C. Incorporated in 1999. First year of S status was 2016. Passive investment income equaled 27% of gross receipts in 2017, 26% in 2018, and 44% in 2019. Subchapter C earnings and profits were $10,000 at the end of each year.
D. Incorporated in 1999. First year of S status was 2014. Passive investment income equaled 19% of gross receipts in 2017, 34% in 2018, and 35% in 2019.
Answer (C)