Question 1

Which of the following tax levies imposed on an S corporation are required to be paid by using estimated tax payments?

Accepted Answer

A) built-in gains tax 
B) excess net passive income tax 
C) both A and B 
D) none of the above 
A) built-in gains tax 
B) excess net passive income tax 
C) both A and B 
D) none of the above

Question 2

On June 30 of the current year,the S election of Great Corporation is terminated,thus creating a six-month S short year and a six-month C short year.Great Corporation is a calendar-year taxpayer.The S short-year return is due

Accepted Answer

A) September 15. 
B) December 15. 
C) March 15 of the next year. 
D) June 30 of the next year. 
A) September 15. 
B) December 15. 
C) March 15 of the next year. 
D) June 30 of the next year.

Question 3

A corporation must make an S election for the current year after March 15 in the case of a calendar-year corporation.

Accepted Answer

A) True 
 B)False

Question 4

Which one of the following individuals or entities is ineligible to be an S corporation shareholder?

Accepted Answer

A) an estate 
B) resident alien of the United States 
C) a voting trust where all of the beneficiaries are U.S.citizens 
D) a partnership where all of the partners are U.S.citizens 
A) an estate 
B) resident alien of the United States 
C) a voting trust where all of the beneficiaries are U.S.citizens 
D) a partnership where all of the partners are U.S.citizens

Question 5

When a Sec.444 fiscal-year election is made,the S corporation makes required payments to the IRS in order to continue to use the fiscal year as its tax year.Which of the following statements about the tax year is correct?

Accepted Answer

A) The Sec.444 payment is deductible by the S corporation as an income tax. 
B) The Sec.444 payment is allocated ratably to each shareholder and claimed as a tax payment on their own tax return(s). 
C) The Sec.444 payments are refundable if the S election is terminated. 
D) The Sec.444 payments must be made quarterly on the same dates that the S corporation's estimated tax payments are otherwise due. 
A) The Sec.444 payment is deductible by the S corporation as an income tax. 
B) The Sec.444 payment is allocated ratably to each shareholder and claimed as a tax payment on their own tax return(s). 
C) The Sec.444 payments are refundable if the S election is terminated. 
D) The Sec.444 payments must be made quarterly on the same dates that the S corporation's estimated tax payments are otherwise due.

Question 6

Identify which of the following statements is true.

Accepted Answer

A) An election for an S corporation to use the Sec.179 expensing election is made by the corporation and not by its shareholders. 
B) The S corporation's separately stated items are in general the same ones that apply in partnership taxation. 
C) An S corporation cannot claim a dividends-received deduction. 
D) All of the above are true. 
A) An election for an S corporation to use the Sec.179 expensing election is made by the corporation and not by its shareholders. 
B) The S corporation's separately stated items are in general the same ones that apply in partnership taxation. 
C) An S corporation cannot claim a dividends-received deduction. 
D) All of the above are true.

Question 7

Identify which of the following statements is true.

Accepted Answer

A) Shareholders who acquire stock in an S corporation after the election date and prior to the election's effective date must consent to the election. 
B) S corporation consent by shareholders is binding on the current tax year and all future tax years. 
C) Only shareholders who own stock on the date an S election takes effect must consent to the election. 
D) All of the above are false. 
A) Shareholders who acquire stock in an S corporation after the election date and prior to the election's effective date must consent to the election. 
B) S corporation consent by shareholders is binding on the current tax year and all future tax years. 
C) Only shareholders who own stock on the date an S election takes effect must consent to the election. 
D) All of the above are false.

Question 8

Train Corporation is an S corporation that is owned equally by Carlos and Diane at the beginning of the year.On April 21 (the 111th day of Train's tax year)of the current year,Carlos sells all of his Train Corporation stock to Andre.How many days will be used when computing Carlos's share of S corporation income for this year (a non-leap year),assuming that a special income allocation election is not made?

Accepted Answer

A) 110 
B) 111 
C) 254 
D) 255 
A) 110 
B) 111 
C) 254 
D) 255

Question 9

An electing S corporation has a $30,000 ordinary loss for the nonleap year.On January 1,Beverly and Sonya own equally all of the S corporation stock.On the 146th day of the year,Beverly gives her one-half of the S corporation stock to her daughter Becky.How much of the $30,000 ordinary loss is allocated to Beverly?

Accepted Answer

A) $25,000 
B) $15,000 
C) $6,000 
D) $5,959 
A) $25,000 
B) $15,000 
C) $6,000 
D) $5,959

Question 10

Davies Corporation is a calendar-year taxpayer that is owned equally by Vivian,Rob,Danny,and Doug Davies.At the close of business on May 31,Rob Davies sells his 25% stock interest to Paula Bryan.Which of the following statements about the S election is correct?

Accepted Answer

A) Paula must consent to the S election,otherwise the election terminates at the close of business on May 31. 
B) A new S election form must be filed by June 30 of the same year,with all shareholders consenting to the election.If a new S election is not filed,the election terminates on June 30 of that year. 
C) Paula has 30 days to terminate the S election,otherwise the election remains in place for the entire year and all subsequent years. 
D) None of the above statements are correct. 
A) Paula must consent to the S election,otherwise the election terminates at the close of business on May 31. 
B) A new S election form must be filed by June 30 of the same year,with all shareholders consenting to the election.If a new S election is not filed,the election terminates on June 30 of that year. 
C) Paula has 30 days to terminate the S election,otherwise the election remains in place for the entire year and all subsequent years. 
D) None of the above statements are correct.

Question 11

A testamentary trust can be an S shareholder for two years,beginning on the date the stock transfers to the trust.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following would terminate a Subchapter S election?

Accepted Answer

A) Estate becomes a shareholder. 
B) Grantor trust becomes a shareholder. 
C) Voting trust becomes a shareholder. 
D) Partnership becomes a shareholder. 
A) Estate becomes a shareholder. 
B) Grantor trust becomes a shareholder. 
C) Voting trust becomes a shareholder. 
D) Partnership becomes a shareholder.

Question 13

S shareholders cannot increase the basis of their stock by a ratable share of the general S corporation liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Alligood Corporation has two classes of common stock outstanding.The Class A and Class B common stock give the shareholders identical rights and interests in the profits and assets of the corporation.Class A stock has one vote per share.Class B stock is nonvoting.Alligood Corporation may

Accepted Answer

A) not make the S election due to different voting rights. 
B) make the S election once the Class B is retired. 
C) make the S election at any time. 
D) not make the S election due to two classes of stock. 
A) not make the S election due to different voting rights. 
B) make the S election once the Class B is retired. 
C) make the S election at any time. 
D) not make the S election due to two classes of stock.

Question 15

An S corporation is permitted to claim

Accepted Answer

A) the dividends-received deduction. 
B) a personal exemption. 
C) a deduction based on the amortization of organizational expenditures. 
D) a net operating loss. 
A) the dividends-received deduction. 
B) a personal exemption. 
C) a deduction based on the amortization of organizational expenditures. 
D) a net operating loss.

Question 16

The election of Subchapter S status by a corporation is valid only if all shareholders consent to the election.

Accepted Answer

A) True 
 B)False

Question 17

Which one of the following special loss limitations applies to an S corporation?

Accepted Answer

A) at-risk rules 
B) passive activity limitation rules 
C) hobby loss rules 
D) All of the above apply. 
A) at-risk rules 
B) passive activity limitation rules 
C) hobby loss rules 
D) All of the above apply.

Question 18

Chuck Corporation reports the following results for this year:
Service (nonpassive)income $17,500
Dividend income 18,500
Interest income 14,000
Passive income-related expenses 5,000
Other expenses 12,500
At the end of this year,Chuck's E&P for its C corporation tax years amount to $30,000.Compute Chuck Corporation's excess net passive income.

Accepted Answer

@#IMG-DLM& = @#IMG-DLM& × @#IMG-DLM& $16

Question 19

Identify which of the following statements is true.

Accepted Answer

A) Perry Corporation,an S corporation,receives $10,000 of dividends from a 25%-owned domestic corporation.Perry is allowed an 80% dividends-received deduction with respect to the distribution. 
B) An NOL is incurred by a C corporation in the current tax year.The C corporation makes an S election for the following tax year.The entire C corporation NOL carryover can be passed through to the S corporation's shareholders at the end of the following tax year. 
C) Tax-exempt interest earned by an S corporation is not reported to its shareholders because it is excluded from the shareholders' gross income. 
D) All of the above are false. 
A) Perry Corporation,an S corporation,receives $10,000 of dividends from a 25%-owned domestic corporation.Perry is allowed an 80% dividends-received deduction with respect to the distribution. 
B) An NOL is incurred by a C corporation in the current tax year.The C corporation makes an S election for the following tax year.The entire C corporation NOL carryover can be passed through to the S corporation's shareholders at the end of the following tax year. 
C) Tax-exempt interest earned by an S corporation is not reported to its shareholders because it is excluded from the shareholders' gross income. 
D) All of the above are false.

Question 20

The recognition period for the built-in gains tax extends for how many years after the S election takes effect?

Accepted Answer

A) one year 
B) three years 
C) five years 
D) ten years 
A) one year 
B) three years 
C) five years 
D) ten years

Exam 11: S Corporations

Which of the following tax levies imposed on an S corporation are required to be paid by using estimated tax payments?

On June 30 of the current year,the S election of Great Corporation is terminated,thus creating a six-month S short year and a six-month C short year.Great Corporation is a calendar-year taxpayer.The S short-year return is due

A corporation must make an S election for the current year after March 15 in the case of a calendar-year corporation.

Which one of the following individuals or entities is ineligible to be an S corporation shareholder?

When a Sec.444 fiscal-year election is made,the S corporation makes required payments to the IRS in order to continue to use the fiscal year as its tax year.Which of the following statements about the tax year is correct?

Identify which of the following statements is true.

Identify which of the following statements is true.

Davies Corporation is a calendar-year taxpayer that is owned equally by Vivian,Rob,Danny,and Doug Davies.At the close of business on May 31,Rob Davies sells his 25% stock interest to Paula Bryan.Which of the following statements about the S election is correct?

A testamentary trust can be an S shareholder for two years,beginning on the date the stock transfers to the trust.

Which of the following would terminate a Subchapter S election?

S shareholders cannot increase the basis of their stock by a ratable share of the general S corporation liabilities.

Alligood Corporation has two classes of common stock outstanding.The Class A and Class B common stock give the shareholders identical rights and interests in the profits and assets of the corporation.Class A stock has one vote per share.Class B stock is nonvoting.Alligood Corporation may

An S corporation is permitted to claim

The election of Subchapter S status by a corporation is valid only if all shareholders consent to the election.

Which one of the following special loss limitations applies to an S corporation?

Identify which of the following statements is true.

The recognition period for the built-in gains tax extends for how many years after the S election takes effect?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

U.S. Taxation of Foreign-Related Transactions

an Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Business Expenses and Deferred Compensation

Itemized Deductions

Losses and Bad Debts

Depreciation,cost Recovery,amortization,and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods,tax Credits,and Payment of Tax

Tax Research

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Partnerships and S Corporations

Taxes and Investment Planning

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