Question 1

The maximum number of actual shareholders in an S corporation is:

Accepted Answer

A)  75. 
B)  100. 
C)  200. 
D)  Some other number. 
E)  Indeterminable. 
A)  75. 
B)  100. 
C)  200. 
D)  Some other number. 
E)  Indeterminable.

Question 2

Depletion in excess of basis in property causes a(n) ____________________ adjustment to an S shareholder's basis.

Accepted Answer

The answer of Depletion in excess of basis in property...

Question 3

Which statement is incorrect with respect to an S shareholder's consent?

Accepted Answer

A)  A consent extension is available only if Form 2553 is filed on a timely basis, reasonable cause is given, and the interests of the government are not jeopardized. 
B)  Both husband and wife must consent if one owns the stock as community property. 
C)  An S election requires a consent from all of the S corporation's shareholders. 
D)  A consent must be in writing. 
E)  None of the above statements is incorrect. 
A)  A consent extension is available only if Form 2553 is filed on a timely basis, reasonable cause is given, and the interests of the government are not jeopardized. 
B)  Both husband and wife must consent if one owns the stock as community property. 
C)  An S election requires a consent from all of the S corporation's shareholders. 
D)  A consent must be in writing. 
E)  None of the above statements is incorrect.

Question 4

Arizona is a(n) ____________________ property state for purposes of the S corporation requirements.

Accepted Answer

The answer of Arizona is a(n) ____________________ property state for...

Question 5

Yates Corporation elects S status, effective for calendar year 2015. Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1, 2015. The asset is sold at the end of 2015 for $130,800. What amount must Mark Farris, a 60% owner and subject to a 15% income tax rate, pay, if any?

Accepted Answer

A)  $5,358 
B)  $12,642 
C)  $21,070 
D)  $35,718 
A)  $5,358 
B)  $12,642 
C)  $21,070 
D)  $35,718

Question 6

Which, if any, of the following items decreases an S corporation's AAA?

Accepted Answer

A)  Section 1231 loss. 
B)  Expenses related to tax-exempt income. 
C)  Depletion in excess of basis. 
D)  Distribution from earnings and profits. 
E)  None of the above affects the AAA. 
A)  Section 1231 loss. 
B)  Expenses related to tax-exempt income. 
C)  Depletion in excess of basis. 
D)  Distribution from earnings and profits. 
E)  None of the above affects the AAA.

Question 7

Which, if any, of the following can be eligible shareholders of an S corporation?

Accepted Answer

A)  A partnership. 
B)  A nonresident alien. 
C)  A voting trust. 
D)  The estate of a deceased shareholder. 
A)  A partnership. 
B)  A nonresident alien. 
C)  A voting trust. 
D)  The estate of a deceased shareholder.

Question 8

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity, but distributions do not reduce loan basis.

Accepted Answer

A) True 
 B)False

Question 9

Towne, Inc., a calendar year S corporation, holds AAA of $627,050 at the beginning of 2015. During the year, the following items occur.   
​
Calculate Towne's ending AAA balance.

Accepted Answer

The answer of Towne, Inc., a calendar year S corporation,...

Question 10

An S corporation is subject to the following tax.

Accepted Answer

A)  Corporate income tax (§ 11). 
B)  Built-in gains tax. 
C)  Alternative minimum tax. 
D)  None of the above apply to S corporations. 
A)  Corporate income tax (§ 11). 
B)  Built-in gains tax. 
C)  Alternative minimum tax. 
D)  None of the above apply to S corporations.

Question 11

Which statement is correct with respect to filing an S election?

Accepted Answer

A)  Form 2553 must be filed. 
B)  All shareholders must consent. 
C)  The election may be filed in the previous year. 
D)  An extension of time is available for filing Form 2553. 
E)  All of the above statements are correct. 
A)  Form 2553 must be filed. 
B)  All shareholders must consent. 
C)  The election may be filed in the previous year. 
D)  An extension of time is available for filing Form 2553. 
E)  All of the above statements are correct.

Question 12

A per-day, per-share allocation of flow-through S corporation items must be used, unless the shareholder disposes of the entire interest in the entity.

Accepted Answer

A) True 
 B)False

Question 13

The corporate-level tax on recognized built-in gains applies in 2015 when an S corporation disposes of an asset in a taxable disposition within ten years after the date on which the S election took effect.

Accepted Answer

A) True 
 B)False

Question 14

NOL carryovers from C years can be used in an S corporation year against ordinary income.

Accepted Answer

A) True 
 B)False

Question 15

When an S corporation liquidates, which of its tax attributes disappear?

Accepted Answer

A)  AAA. 
B)  AEP. 
C)  Suspended losses. 
D)  All of the above items disappear. 
A)  AAA. 
B)  AEP. 
C)  Suspended losses. 
D)  All of the above items disappear.

Question 16

Which item does not appear on Schedule K of Form 1120S?

Accepted Answer

A)  Tax-exempt interest income. 
B)  Section 1231 gain. 
C)  Section 179 depreciation deduction. 
D)  Depreciation recapture income. 
E)  All of the above appear on Schedule K. 
A)  Tax-exempt interest income. 
B)  Section 1231 gain. 
C)  Section 179 depreciation deduction. 
D)  Depreciation recapture income. 
E)  All of the above appear on Schedule K.

Question 17

Explain the OAA concept.

Accepted Answer

S corporations report changes in the AAA

Question 18

An S corporation's separately stated items generally are identical to those separately stated by _________________________.

Accepted Answer

The answer of An S corporation's separately stated items generally...

Question 19

Which of these tax provisions does not apply to an S corporation?

Accepted Answer

A)  Section 1244 stock. 
B)  "Partial liquidation" stock redemption. 
C)  Tax-free "A" reorganization. 
D)  Section 1202 capital gain exclusion. 
A)  Section 1244 stock. 
B)  "Partial liquidation" stock redemption. 
C)  Tax-free "A" reorganization. 
D)  Section 1202 capital gain exclusion.

Question 20

On January 1, Bobby and Alice own equally all of the stock of an electing S corporation called Prairie Dirt Delight. The dirt company has a $60,000 loss for a non-leap year. On the 200th day of the year, Bobby sells his one-half of the stock to his son, Saul. How much of the $60,000 loss, if any, is allocated to Bobby?

Accepted Answer

A)  $0 
B)  $13,562 
C)  $16,438 
D)  $32,877 
A)  $0 
B)  $13,562 
C)  $16,438 
D)  $32,877

The maximum number of actual shareholders in an S corporation is:

Depletion in excess of basis in property causes a(n) ____________________ adjustment to an S shareholder's basis.

Which statement is incorrect with respect to an S shareholder's consent?

Arizona is a(n) ____________________ property state for purposes of the S corporation requirements.

Which, if any, of the following items decreases an S corporation's AAA?

Which, if any, of the following can be eligible shareholders of an S corporation?

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity, but distributions do not reduce loan basis.

Towne, Inc., a calendar year S corporation, holds AAA of $627,050 at the beginning of 2015. During the year, the following items occur. Calculate Towne's ending AAA balance.

An S corporation is subject to the following tax.

Which statement is correct with respect to filing an S election?

A per-day, per-share allocation of flow-through S corporation items must be used, unless the shareholder disposes of the entire interest in the entity.

The corporate-level tax on recognized built-in gains applies in 2015 when an S corporation disposes of an asset in a taxable disposition within ten years after the date on which the S election took effect.

NOL carryovers from C years can be used in an S corporation year against ordinary income.

When an S corporation liquidates, which of its tax attributes disappear?

Which item does not appear on Schedule K of Form 1120S?

Explain the OAA concept.

An S corporation's separately stated items generally are identical to those separately stated by _________________________.

Which of these tax provisions does not apply to an S corporation?

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 12: S Corporations

The maximum number of actual shareholders in an S corporation is:

Depletion in excess of basis in property causes a(n) ____________________ adjustment to an S shareholder's basis.

Which statement is incorrect with respect to an S shareholder's consent?

Arizona is a(n) ____________________ property state for purposes of the S corporation requirements.

Which, if any, of the following items decreases an S corporation's AAA?

Which, if any, of the following can be eligible shareholders of an S corporation?

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity, but distributions do not reduce loan basis.

Towne, Inc., a calendar year S corporation, holds AAA of $627,050 at the beginning of 2015. During the year, the following items occur. ​ Calculate Towne's ending AAA balance.

An S corporation is subject to the following tax.

Which statement is correct with respect to filing an S election?

A per-day, per-share allocation of flow-through S corporation items must be used, unless the shareholder disposes of the entire interest in the entity.

The corporate-level tax on recognized built-in gains applies in 2015 when an S corporation disposes of an asset in a taxable disposition within ten years after the date on which the S election took effect.

NOL carryovers from C years can be used in an S corporation year against ordinary income.

When an S corporation liquidates, which of its tax attributes disappear?

Which item does not appear on Schedule K of Form 1120S?

Explain the OAA concept.

An S corporation's separately stated items generally are identical to those separately stated by _________________________.

Which of these tax provisions does not apply to an S corporation?

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Towne, Inc., a calendar year S corporation, holds AAA of $627,050 at the beginning of 2015. During the year, the following items occur. Calculate Towne's ending AAA balance.