[76] Gleim #: 17.4.138 If an S corporation recognizes a built-in gain and pays t

Question

[76] Gleim #: 17.4.138 If an S corporation recognizes a built-in gain and pays tax on it, the shareholders report A. Their share of the entire gain in their own taxable income and obtain a credit for their share of taxes paid by the S corporation. B. Only gain from the transaction that is in excess of the built-in gain, i.e., on appreciation accruing after the first day of the first taxable year for which the corporation was an S corporation. C. No gain from the transaction. D. Their share of the individual gains reduced by the taxes paid by the S corporation that are attributable to such gains.

Explanation / Answer

The correct answer is Option D. (their share of the individual gains reduced by the taxed paid by S corporation that are attributable to such gains)

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