Question 1

An S corporation is permitted to claim

Accepted Answer

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

Question 2

Corporations and partnerships can be S corporation shareholders.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following would terminate a Subchapter S election?

Accepted Answer

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

Question 4

Mashburn Corporation is an S corporation that uses a fiscal year ending June 30 as its tax year. When is Mashburn Corporation's income tax return due?

Accepted Answer

A)  July 15 
B)  March 15 of the next year 
C)  October 15 
D)  September 15 
A)  July 15 
B)  March 15 of the next year 
C)  October 15 
D)  September 15

Question 5

An electing S corporation has a $30,000 ordinary loss for the non- leap 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 Sonya?

Accepted Answer

A)  $10,000 
B)  $6,000 
C)  $15,000 
D)  $25,000 
A)  $10,000 
B)  $6,000 
C)  $15,000 
D)  $25,000

Question 6

Shamrock 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 has one vote per share. Class B is nonvoting. Can Shamrock Corporation make an S corporation election?

Accepted Answer

Yes, since Shamrock

Question 7

Robert Elk paid $100,000 for all of the single class of stock of Elkom Corporation, an electing S corporation, when incorporated in January, 2007. Elkom's operating results and dividend distribution are as follows:   What is Elk's basis for his Elkom stock on December 31 of 2007?

Accepted Answer

$100,000 - $40,000 + ($60,000 - $20,000)

Question 8

Can loss or credit carryforwards from a previous C corporation tax year help reduce the built- in gains tax?

Accepted Answer

Yes. Both NOL and capital loss carryforw

Question 9

Mary, a U.S. citizen, owned 25% of the stock of Floran Corporation, an electing S corporation. At the time of her death, the Floran stock may go to all the following without affecting the S election except

Accepted Answer

A)  a charitable remainder unitrust. 
B)  a small business trust. 
C)  a testamentary trust. 
D)  her estate. 
A)  a charitable remainder unitrust. 
B)  a small business trust. 
C)  a testamentary trust. 
D)  her estate.

Question 10

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

Accepted Answer

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

Question 11

Trusts that can own S corporation stock include all of the following except

Accepted Answer

A)  testamentary trusts. 
B)  QSSTs. 
C)  grantor trusts. 
D)  charitable remainder unitrusts. 
A)  testamentary trusts. 
B)  QSSTs. 
C)  grantor trusts. 
D)  charitable remainder unitrusts.

Question 12

Bellows Corporation, a calendar- year taxpayer, has been an S corporation for ten years. Last year, John sold all the Bellows stock to Micky. Payments for the stock are to be made over a five- year period. In March of next year, Micky fails to make the necessary payments and John repossesses the stock. During the time Micky holds the stock, Bellows Corporation revokes its S election. Can Bellows Corporation reelect S status?

Accepted Answer

Yes, Bellows Corporation can i

Question 13

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 allocated ratably to each shareholder and claimed as a tax payment on their own tax return(s). 
B)  The Sec. 444 payments are refundable if the S election is terminated. 
C)  The Sec. 444 payment is deductible by the S corporation as an income tax. 
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 allocated ratably to each shareholder and claimed as a tax payment on their own tax return(s). 
B)  The Sec. 444 payments are refundable if the S election is terminated. 
C)  The Sec. 444 payment is deductible by the S corporation as an income tax. 
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 14

The passive income test relating to an S corporation election is applied

Accepted Answer

A)  quarterly. 
B)  daily. 
C)  monthly. 
D)  annually. 
A)  quarterly. 
B)  daily. 
C)  monthly. 
D)  annually.

Question 15

Connie's Restaurant has been an S corporation since it was formed in 2006. Its results for the previous year are as follows:   What are Connie's separately stated items? What is the S corporation's ordinary income?

Accepted Answer

The separately stated items, o

Question 16

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 17

Identify which of the following statements is true.

Accepted Answer

A)  Section 444 permits an S corporation to elect to use a fiscal year other than a permitted year. 
B)  The natural business year for fiscal- year election purposes is any tax year that ends within six months after the peak period of business. 
C)  A new corporation that is 100% owned by Johnny Blake, a cash method of accounting taxpayer, makes an S election for its initial tax year. The S corporation must also elect to use the cash method of accounting as its overall accounting method. 
D)  All of the above are false. 
A)  Section 444 permits an S corporation to elect to use a fiscal year other than a permitted year. 
B)  The natural business year for fiscal- year election purposes is any tax year that ends within six months after the peak period of business. 
C)  A new corporation that is 100% owned by Johnny Blake, a cash method of accounting taxpayer, makes an S election for its initial tax year. The S corporation must also elect to use the cash method of accounting as its overall accounting method. 
D)  All of the above are false.

Question 18

Identify which of the following statements is true.

Accepted Answer

A)  Tax- exempt interest earned by an S corporation is not reported to its shareholders because it is excluded from the shareholders' gross income. 
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)  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. 
D)  All of the above are false. 
A)  Tax- exempt interest earned by an S corporation is not reported to its shareholders because it is excluded from the shareholders' gross income. 
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)  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. 
D)  All of the above are false.

Question 19

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

Question 20

Identify which of the following statements is false.

Accepted Answer

A)  A shareholder's ratable share of the S corporation's ordinary loss reduces the adjusted basis of his/her S corporation stock. Once the basis of the stock is reduced to zero, any loss- passthrough that remains reduces the basis of S corporation debts that are owed to the shareholder. 
B)  Randy is a shareholder in an S corporation. His stock basis is $10,000 and his basis in a loan he made to the corporation is $3,000. Randy's share of the corporation's ordinary loss for the current year is $11,000. Ignoring the at- risk and passive activity limitations, Randy can deduct the loss in full. 
C)  A shareholder's S corporation stock basis will increase when the shareholder acts as guarantor on a corporate indebtedness. 
D)  Debt basis is restored before stock basis. 
A)  A shareholder's ratable share of the S corporation's ordinary loss reduces the adjusted basis of his/her S corporation stock. Once the basis of the stock is reduced to zero, any loss- passthrough that remains reduces the basis of S corporation debts that are owed to the shareholder. 
B)  Randy is a shareholder in an S corporation. His stock basis is $10,000 and his basis in a loan he made to the corporation is $3,000. Randy's share of the corporation's ordinary loss for the current year is $11,000. Ignoring the at- risk and passive activity limitations, Randy can deduct the loss in full. 
C)  A shareholder's S corporation stock basis will increase when the shareholder acts as guarantor on a corporate indebtedness. 
D)  Debt basis is restored before stock basis.

An S corporation is permitted to claim

Corporations and partnerships can be S corporation shareholders.

Which of the following would terminate a Subchapter S election?

Mashburn Corporation is an S corporation that uses a fiscal year ending June 30 as its tax year. When is Mashburn Corporation's income tax return due?

Robert Elk paid $100,000 for all of the single class of stock of Elkom Corporation, an electing S corporation, when incorporated in January, 2007. Elkom's operating results and dividend distribution are as follows: What is Elk's basis for his Elkom stock on December 31 of 2007?

Can loss or credit carryforwards from a previous C corporation tax year help reduce the built- in gains tax?

Mary, a U.S. citizen, owned 25% of the stock of Floran Corporation, an electing S corporation. At the time of her death, the Floran stock may go to all the following without affecting the S election except

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

Trusts that can own S corporation stock include all of the following except

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?

The passive income test relating to an S corporation election is applied

Connie's Restaurant has been an S corporation since it was formed in 2006. Its results for the previous year are as follows: What are Connie's separately stated items? What is the S corporation's ordinary income?

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

Identify which of the following statements is true.

Identify which of the following statements is true.

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

Identify which of the following statements is false.

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

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

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Exam 11: S Corporations

An S corporation is permitted to claim

Corporations and partnerships can be S corporation shareholders.

Which of the following would terminate a Subchapter S election?

Mashburn Corporation is an S corporation that uses a fiscal year ending June 30 as its tax year. When is Mashburn Corporation's income tax return due?

Robert Elk paid $100,000 for all of the single class of stock of Elkom Corporation, an electing S corporation, when incorporated in January, 2007. Elkom's operating results and dividend distribution are as follows: What is Elk's basis for his Elkom stock on December 31 of 2007?

Can loss or credit carryforwards from a previous C corporation tax year help reduce the built- in gains tax?

Mary, a U.S. citizen, owned 25% of the stock of Floran Corporation, an electing S corporation. At the time of her death, the Floran stock may go to all the following without affecting the S election except

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

Trusts that can own S corporation stock include all of the following except

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?

The passive income test relating to an S corporation election is applied

Connie's Restaurant has been an S corporation since it was formed in 2006. Its results for the previous year are as follows: What are Connie's separately stated items? What is the S corporation's ordinary income?

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

Identify which of the following statements is true.

Identify which of the following statements is true.

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

Identify which of the following statements is false.

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

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters