1. ABC Corp was a C corporation with two assets. On the date that it converted to an S corporation the assets had the following characteristics: One asset had a basis of $50,000 and a fair market value of $750,000 and another asset with a basis of $500,000 and a fair market value of $300,000. 4 years and 10 months after the date of the conversion the corporation disposed of the asset with the unrealized gain for $2 million. Will the corporation have to pay tax due to the sale? If so, how much, assume a 21% tax rate. How much income will pass through to the shareholders?