Question 1

Identify which of the following statements is true.

Accepted Answer

A)  An S corporation may be subject to the corporate alternative minimum tax when the corporation has accumulated E&P from prior C corporation tax years. 
B)  An S corporation may be subject to the corporate alternative minimum tax. 
C)  Allocation of tax preference items for AMT generally occurs on a daily basis. 
D)  All of the above are false. 
A)  An S corporation may be subject to the corporate alternative minimum tax when the corporation has accumulated E&P from prior C corporation tax years. 
B)  An S corporation may be subject to the corporate alternative minimum tax. 
C)  Allocation of tax preference items for AMT generally occurs on a daily basis. 
D)  All of the above are false.

Question 2

Identify which of the following statements is true.

Accepted Answer

A)  An S corporation can have more than 100 shareholders, since families are treated as a single shareholder. 
B)  A nonresident alien can be an S corporation shareholder. 
C)  A partnership can be an S corporation shareholder. 
D)  All of the above are false. 
A)  An S corporation can have more than 100 shareholders, since families are treated as a single shareholder. 
B)  A nonresident alien can be an S corporation shareholder. 
C)  A partnership can be an S corporation shareholder. 
D)  All of the above are false.

Question 3

April Corporation's Subchapter S election was voluntarily terminated for 2010. The first year that April would be eligible to reelect S corporation status is

Accepted Answer

A)  2013. 
B)  2012. 
C)  2014. 
D)  2015. 
A)  2013. 
B)  2012. 
C)  2014. 
D)  2015.

Question 4

Cook's Outlet has been an S corporation since its inception six years ago. On January 1 of the current year, the corporation's two equal shareholders, Davis and Dane, had adjusted bases of $150,000 and $175,000, respectively, for their S corporation's stock. The shareholders plan to have the corporation distribute land with a
$50,000 adjusted basis and a $200,000 FMV in the current year. Ordinary income is expected to be $180,000 in the current year. What tax issues should Davis and Dane consider with respect to the distribution?

Accepted Answer

• What gain or loss does Cook's Outlet r

Question 5

An S corporation reports ordinary income of $120,000 after deducting $20,000 for Fred's salary. Fred and his three children own the S corporation equally. The IRS determines Fred's stock transfer to his three children is not bona fide. Reasonable compensation for Fred is $40,000. How much of the S corporation's $140,000 pre- salary income must be reported by Fred?

Accepted Answer

A)  $40,000 
B)  $100,000 
C)  $50,000 
D)  $140,000 
A)  $40,000 
B)  $100,000 
C)  $50,000 
D)  $140,000

Question 6

Pressley Corporation was incorporated on January 1, 2004. The corporation made its S election on March 1, 2008. The corporation retains an E&P balance from its C corporation days. During the current year, it made a cash distribution to its sole shareholder Robert Pressley. What is the proper sequence in reducing the corporate earnings accounts for the distribution?

Accepted Answer

A)  AAA; E&P 
B)  E&P; AAA 
C)  AAA; OAA; E&P 
D)  AAA; PTI; E&P 
A)  AAA; E&P 
B)  E&P; AAA 
C)  AAA; OAA; E&P 
D)  AAA; PTI; E&P

Question 7

Which of the following conditions will not cause an S election to be terminated?

Accepted Answer

A)  exceeding the 100- shareholder limit 
B)  failing to file a timely tax return 
C)  creating a second class of stock having a dividend preference 
D)  selecting an improper tax year 
A)  exceeding the 100- shareholder limit 
B)  failing to file a timely tax return 
C)  creating a second class of stock having a dividend preference 
D)  selecting an improper tax year

Question 8

An S corporation is permitted an automatic extension of time for filing its tax return. The automatic extension period is

Accepted Answer

A)  six months. 
B)  one month. 
C)  three months. 
D)  two months. 
A)  six months. 
B)  one month. 
C)  three months. 
D)  two months.

Question 9

Chuck Corporation reports the following results for this year:   At the end of this year, Chuck's E&P for its C corporation tax years amount to $30,000. Compute Chuck Corporat excess net passive income.

Accepted Answer

The answer of Chuck Corporation reports the following results for...

Question 10

If an S corporation inadvertently terminates its election, the IRS

Accepted Answer

A)  will permit restoration of the S election only if the event causing the termination was not within the control of the corporation. 
B)  may permit the corporation to report as an S corporation even for the period that includes the termination date. 
C)  will not permit the corporation to restore its S election until the completion of a five- year waiting period. 
D)  will permit restoration of the S election if a majority of the shareholders consent to the reinstatement. 
A)  will permit restoration of the S election only if the event causing the termination was not within the control of the corporation. 
B)  may permit the corporation to report as an S corporation even for the period that includes the termination date. 
C)  will not permit the corporation to restore its S election until the completion of a five- year waiting period. 
D)  will permit restoration of the S election if a majority of the shareholders consent to the reinstatement.

Question 11

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

Accepted Answer

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

Question 12

Shanghai Corporation was organized and elected S status in the current year. How much passive investment income can Shanghai earn and retain its S status?

Accepted Answer

A)  no limit 
B)  50% of gross receipts 
C)  80% of gross receipts 
D)  none 
A)  no limit 
B)  50% of gross receipts 
C)  80% of gross receipts 
D)  none

Question 13

Troy owns 50% of Dot.Com, an e- commerce company. His S corporation stock basis at the beginning of the year is $300,000. Dot.Com has not done well this year and will report an ordinary loss of $875,000. Troy's marginal tax rate for the current year is 35%. What tax issues should Troy consider with respect to the loss?

Accepted Answer

What is Troy's allocable share of the Do

Question 14

Identify which of the following statements is true.

Accepted Answer

A)  For C corporations that desire to be taxed like a partnership, the S corporation rules provide a practical alternative for an existing C corporation to obtain many of the tax benefits of being taxed as a partnership. 
B)  A partnership can elect to be taxed as a corporation under the check- the- box regulations. As a corporation, an S election can be made. 
C)  The S corporation rules were enacted to allow small corporations to enjoy the nontax advantages of the corporate form of business without being subject to the tax disadvantage of double taxation. 
D)  All of the above are true. 
A)  For C corporations that desire to be taxed like a partnership, the S corporation rules provide a practical alternative for an existing C corporation to obtain many of the tax benefits of being taxed as a partnership. 
B)  A partnership can elect to be taxed as a corporation under the check- the- box regulations. As a corporation, an S election can be made. 
C)  The S corporation rules were enacted to allow small corporations to enjoy the nontax advantages of the corporate form of business without being subject to the tax disadvantage of double taxation. 
D)  All of the above are true.

Question 15

Eagle Corporation has always been an S corporation. Eagle is 100% owned by Katy. Katy's adjusted basis in the Eagle stock is $100,000 on January 1 of the current year. During the current year, Eagle distributes XYZ stock (a capital asset) to Katy. The XYZ stock has a $50,000 FMV and a $40,000 adjusted basis on Eagle's books. The XYZ stock has been held as an investment for four years by Eagle. Eagle Corporation reports $40,000 of ordinary income in the current year. What is Katy's basis in the Eagle stock at the beginning of the next year?

Accepted Answer

The answer of Eagle Corporation has always been an S...

Question 16

What is a permitted year?

Accepted Answer

A permitted year is defined as

Question 17

A C corporation was formed five years ago and is a fiscal- year taxpayer with a June 30 year- end. The C corporation wants to make an S election for its tax year beginning in the current year. The election must be made by (assuming permission can be obtained to continue using the fiscal year from the IRS).

Accepted Answer

A)  June 30 of the next year 
B)  September 15 of the next year 
C)  June 30 of the current year 
D)  September 15 of the current year 
A)  June 30 of the next year 
B)  September 15 of the next year 
C)  June 30 of the current year 
D)  September 15 of the current year

Question 18

Identify which of the following statements is false.

Accepted Answer

A)  Nonmoney property distributions made by an S corporation having accumulated E&P are treated differently when determining the corporate- level gain recognized under Sec. 311 than are property distributions made by an S corporation without accumulated E&P. 
B)  Tax- exempt income does not increase the AAA but increases the basis of the S corporation stock. 
C)  The AAA represents the cumulative income/loss recognized in post- 1982 S corporation years. 
D)  The AAA balance can be negative, but the shareholder's basis in the S corporation stock cannot be less than zero. 
A)  Nonmoney property distributions made by an S corporation having accumulated E&P are treated differently when determining the corporate- level gain recognized under Sec. 311 than are property distributions made by an S corporation without accumulated E&P. 
B)  Tax- exempt income does not increase the AAA but increases the basis of the S corporation stock. 
C)  The AAA represents the cumulative income/loss recognized in post- 1982 S corporation years. 
D)  The AAA balance can be negative, but the shareholder's basis in the S corporation stock cannot be less than zero.

Question 19

Helmut and Sergei own all the stock of Zappo Corporation, a calendar- year domestic corporation. On January 30 of the current year, Sergei sells his entire interest in the Zappo stock to Nils. All three individuals are U.S. citizens. Can an S election be made for the current year?

Accepted Answer

A)  not for the current year but for the next year 
B)  Yes, if Helmut and Nils agree to report all of the corporation's income for the entire year 
C)  Yes, if Helmut and Nils agree to file a short- period return and Sergei also agrees to the return 
D)  Yes, if Sergei will also join in the election with Helmut and Nils 
A)  not for the current year but for the next year 
B)  Yes, if Helmut and Nils agree to report all of the corporation's income for the entire year 
C)  Yes, if Helmut and Nils agree to file a short- period return and Sergei also agrees to the return 
D)  Yes, if Sergei will also join in the election with Helmut and Nils

Question 20

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

Identify which of the following statements is true.

Identify which of the following statements is true.

April Corporation's Subchapter S election was voluntarily terminated for 2010. The first year that April would be eligible to reelect S corporation status is

Which of the following conditions will not cause an S election to be terminated?

An S corporation is permitted an automatic extension of time for filing its tax return. The automatic extension period is

Chuck Corporation reports the following results for this year: At the end of this year, Chuck's E&P for its C corporation tax years amount to $30,000. Compute Chuck Corporat excess net passive income.

If an S corporation inadvertently terminates its election, the IRS

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

Shanghai Corporation was organized and elected S status in the current year. How much passive investment income can Shanghai earn and retain its S status?

Identify which of the following statements is true.

What is a permitted year?

Identify which of the following statements is false.

Helmut and Sergei own all the stock of Zappo Corporation, a calendar- year domestic corporation. On January 30 of the current year, Sergei sells his entire interest in the Zappo stock to Nils. All three individuals are U.S. citizens. Can an S election be made for the current year?

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

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

Exam 11: S Corporations

Identify which of the following statements is true.

Identify which of the following statements is true.

April Corporation's Subchapter S election was voluntarily terminated for 2010. The first year that April would be eligible to reelect S corporation status is

Which of the following conditions will not cause an S election to be terminated?

An S corporation is permitted an automatic extension of time for filing its tax return. The automatic extension period is

Chuck Corporation reports the following results for this year: At the end of this year, Chuck's E&P for its C corporation tax years amount to $30,000. Compute Chuck Corporat excess net passive income.

If an S corporation inadvertently terminates its election, the IRS

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

Shanghai Corporation was organized and elected S status in the current year. How much passive investment income can Shanghai earn and retain its S status?

Identify which of the following statements is true.

What is a permitted year?

Identify which of the following statements is false.

Helmut and Sergei own all the stock of Zappo Corporation, a calendar- year domestic corporation. On January 30 of the current year, Sergei sells his entire interest in the Zappo stock to Nils. All three individuals are U.S. citizens. Can an S election be made for the current year?

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

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