Question 1

Stock basis first is increased by income items, then ____________________ by distributions, and finally decreased by ____________________.

Accepted Answer

The answer of Stock basis first is increased by income...

Question 2

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Accepted Answer

A) True 
 B)False

Question 3

Where the S corporation rules are silent, C corporation provisions apply.

Accepted Answer

A) True 
 B)False

Question 4

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

Accepted Answer

A) True 
 B)False

Question 5

It is not beneficial for an S corporation to issue § 1244 stock.

Accepted Answer

A) True 
 B)False

Question 6

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

Accepted Answer

A) True 
 B)False

Question 7

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

Accepted Answer

A) True 
 B)False

Question 8

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

Accepted Answer

A) True 
 B)False

Question 9

An S corporation does not recognize a loss when distributing assets that are worth less than their basis.

Accepted Answer

A) True 
 B)False

Question 10

The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

Accepted Answer

A) True 
 B)False

Question 11

Which, if any, of the following items has no effect on the stock basis of an S corporation shareholder?

Accepted Answer

A)  Operating income. 
B)  Long-term capital gain. 
C)  Cost of goods sold. 
D)  Short-term capital loss. 
E)  All of the above affect stock basis. 
A)  Operating income. 
B)  Long-term capital gain. 
C)  Cost of goods sold. 
D)  Short-term capital loss. 
E)  All of the above affect stock basis.

Question 12

With respect to passive losses, there are three classes of income, losses, and credits: ____________________, ____________________, and passive.

Accepted Answer

active, po

Question 13

Which corporation is eligible to make the S election?

Accepted Answer

A)  Non-U.S. corporation. 
B)  Limited liability company. 
C)  Insurance company. 
D)  U.S. bank. 
E)  None of the above can select S status. 
A)  Non-U.S. corporation. 
B)  Limited liability company. 
C)  Insurance company. 
D)  U.S. bank. 
E)  None of the above can select S status.

Question 14

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Accepted Answer

A) True 
 B)False

Question 15

Compensation for services rendered to an S corporation is subject to FICA taxes.

Accepted Answer

A) True 
 B)False

Question 16

The termination of an S election occurs on the day after a corporation ceases to be a qualifying S corporation.

Accepted Answer

A) True 
 B)False

Question 17

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

Accepted Answer

A)  Payroll penalty. 
B)  Unreasonable compensation. 
C)  Life insurance proceeds (nontaxable to the recipient S corporation). 
D)  Taxable interest. 
E)  None of the above affects the OAA. 
A)  Payroll penalty. 
B)  Unreasonable compensation. 
C)  Life insurance proceeds (nontaxable to the recipient S corporation). 
D)  Taxable interest. 
E)  None of the above affects the OAA.

Question 18

The Schedule M-3 is the same for a C corporation and an S corporation.

Accepted Answer

A) True 
 B)False

Question 19

Realized gain is recognized by an S corporation on its distribution of ____________________ property.

Accepted Answer

The answer of Realized gain is recognized by an S...

Question 20

Bidden, Inc., a calendar year S corporation, incurred the following items.   
​
Calculate Bidden's nonseparately computed income.

Accepted Answer

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

Stock basis first is increased by income items, then by distributions, and finally decreased by .

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Where the S corporation rules are silent, C corporation provisions apply.

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

It is not beneficial for an S corporation to issue § 1244 stock.

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

An S corporation does not recognize a loss when distributing assets that are worth less than their basis.

The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

Which, if any, of the following items has no effect on the stock basis of an S corporation shareholder?

With respect to passive losses, there are three classes of income, losses, and credits: , , and passive.

Which corporation is eligible to make the S election?

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Compensation for services rendered to an S corporation is subject to FICA taxes.

The termination of an S election occurs on the day after a corporation ceases to be a qualifying S corporation.

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

The Schedule M-3 is the same for a C corporation and an S corporation.

Realized gain is recognized by an S corporation on its distribution of ____________________ property.

Bidden, Inc., a calendar year S corporation, incurred the following items. Calculate Bidden's nonseparately computed income.

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

Stock basis first is increased by income items, then ____________________ by distributions, and finally decreased by ____________________.

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Where the S corporation rules are silent, C corporation provisions apply.

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

It is not beneficial for an S corporation to issue § 1244 stock.

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

An S corporation does not recognize a loss when distributing assets that are worth less than their basis.

The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

Which, if any, of the following items has no effect on the stock basis of an S corporation shareholder?

With respect to passive losses, there are three classes of income, losses, and credits: ____________________, ____________________, and passive.

Which corporation is eligible to make the S election?

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Compensation for services rendered to an S corporation is subject to FICA taxes.

The termination of an S election occurs on the day after a corporation ceases to be a qualifying S corporation.

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

The Schedule M-3 is the same for a C corporation and an S corporation.

Realized gain is recognized by an S corporation on its distribution of ____________________ property.

Bidden, Inc., a calendar year S corporation, incurred the following items. ​ Calculate Bidden's nonseparately computed income.

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

Stock basis first is increased by income items, then by distributions, and finally decreased by .

With respect to passive losses, there are three classes of income, losses, and credits: , , and passive.

Bidden, Inc., a calendar year S corporation, incurred the following items. Calculate Bidden's nonseparately computed income.