Question 1

Advise your client how income, expenses, gain, and losses are allocated to shareholders of an S corporation.

Accepted Answer

In general, S corporation items are divi

Question 2

A calendar year C corporation reports a $41,000 NOL in 2014, but it elects S status for 2015 and generates an NOL of $30,000 in that year. At all times during 2015, the stock of the corporation was owned by the same 10 shareholders, each of whom owned 10% of the stock. Kris, one of the 10 shareholders, holds an S stock basis of $2,300 at the beginning of 2015. How much of the 2015 loss, if any, is deductible by Kris?

Accepted Answer

A)  $0 
B)  $2,300 
C)  $3,000 
D)  $7,100 
A)  $0 
B)  $2,300 
C)  $3,000 
D)  $7,100

Question 3

An S corporation may not amortize its organization expenses.

Accepted Answer

A) True 
 B)False

Question 4

Chris, the sole shareholder of Taylor, Inc., elects during 2015 to terminate the S election, effective January 1, 2016. As of the end of 2015, Taylor, Inc., holds AAA of $120,000 and OAA of $13,000. Chris receives a cash distribution of $130,000 on January 15, 2016. If his stock basis is $220,000 before the distribution, calculate Chris's taxable amount and his ending stock basis.

Accepted Answer

Cash distributions reduce the AAA ($120,

Question 5

Claude Bergeron sold 1,000 shares of Ditta, Inc., an S corporation, for $12,000. He had owned the stock for three years and had a stock basis of $111,000 in the shares. Claude is single, and he is the original owner of the § 1244 stock shares. Calculate the appropriate tax treatment.

Accepted Answer

A)  No gain or loss. 
B)  $50,000 LTCL; $49,000 ordinary deduction. 
C)  $50,000 ordinary deduction; $49,000 LTCL. 
D)  $99,000 long-term capital loss. 
A)  No gain or loss. 
B)  $50,000 LTCL; $49,000 ordinary deduction. 
C)  $50,000 ordinary deduction; $49,000 LTCL. 
D)  $99,000 long-term capital loss.

Question 6

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

Accepted Answer

A) True 
 B)False

Question 7

A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

Accepted Answer

A) True 
 B)False

Question 8

The amount of any distribution to an S corporation shareholder is equal to the ____________________ plus the fair market value of any other property distributed.

Accepted Answer

The answer of The amount of any distribution to an...

Question 9

Gene Grams is a 45% owner of a calendar year S corporation during 2015. His beginning stock basis is $230,000, and the S corporation reports the following items.   
​
Calculate Grams's stock basis at year-end.

Accepted Answer

The answer of Gene Grams is a 45% owner of...

Question 10

Several individuals acquire assets on behalf of Skip Corporation on May 28, 2015, purchased assets on June 3, 2015, and began business on June 11, 2015. They subscribe to shares of stock, file articles of incorporation for Skip, and become shareholders on June 21, 2015. The S election must be filed no later than 2 1/2 months after:

Accepted Answer

A)  May 28, 2015. 
B)  June 3, 2015. 
C)  June 11, 2015. 
D)  June 21, 2015. 
E)  December 31, 2015. 
A)  May 28, 2015. 
B)  June 3, 2015. 
C)  June 11, 2015. 
D)  June 21, 2015. 
E)  December 31, 2015.

Question 11

Pepper, Inc., an S corporation, holds a $1 million balance in accumulated E&P. It reports sales revenues of $400,000, taxable interest of $380,000, operating expenses of $250,000, and deductions attributable to the interest income of $140,000. What is Pepper's passive income penalty tax payable, if any?

Accepted Answer

A)  $380,000. 
B)  $185,000. 
C)  $40,895. 
D)  $0. 
E)  Some other amount. 
A)  $380,000. 
B)  $185,000. 
C)  $40,895. 
D)  $0. 
E)  Some other amount.

Question 12

The passive investment income of an S corporation includes gains from the sale of securities.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  Intangible drilling costs. 
B)  Foreign loss. 
C)  Utilities expense. 
D)  Recovery of a tax benefit. 
E)  All of the above items appear on Schedule K. 
A)  Intangible drilling costs. 
B)  Foreign loss. 
C)  Utilities expense. 
D)  Recovery of a tax benefit. 
E)  All of the above items appear on Schedule K.

Question 14

What statement is correct with respect to an S corporation?

Accepted Answer

A)  There is no advantage to elect § 1244 stock. 
B)  An S corporation can own up to 85% of an insurance company. 
C)  A resident alien may be a shareholder. 
D)  A voting trust arrangement is not available. 
E)  None of the above statements is true. 
A)  There is no advantage to elect § 1244 stock. 
B)  An S corporation can own up to 85% of an insurance company. 
C)  A resident alien may be a shareholder. 
D)  A voting trust arrangement is not available. 
E)  None of the above statements is true.

Question 15

Most limited liability partnerships can own stock in an S corporation.

Accepted Answer

A) True 
 B)False

Question 16

Identify a disadvantage of being an S corporation.

Accepted Answer

A)  Estates can be shareholders. 
B)  Losses flow through immediately to the shareholders. 
C)  The AMT on corporations is avoided. 
D)  Tax-exempt income flows through as excludible to shareholders. 
E)  None of the above is a disadvantage of the S election. 
A)  Estates can be shareholders. 
B)  Losses flow through immediately to the shareholders. 
C)  The AMT on corporations is avoided. 
D)  Tax-exempt income flows through as excludible to shareholders. 
E)  None of the above is a disadvantage of the S election.

Question 17

Distribution of loss property by an S corporation to a shareholder generally should be _________________.

Accepted Answer

The answer of Distribution of loss property by an S...

Question 18

An S corporation cannot incur a tax liability at the corporation level.

Accepted Answer

A) True 
 B)False

Question 19

Which statement is incorrect?

Accepted Answer

A)  S corporations are treated as corporations under state law. 
B)  S corporations are treated as partnerships for Federal income tax purposes. 
C)  Distributions of appreciated property are taxable to the S corporation. 
D)  None of the above statements is incorrect. 
A)  S corporations are treated as corporations under state law. 
B)  S corporations are treated as partnerships for Federal income tax purposes. 
C)  Distributions of appreciated property are taxable to the S corporation. 
D)  None of the above statements is incorrect.

Question 20

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

Accepted Answer

A) True 
 B)False

Advise your client how income, expenses, gain, and losses are allocated to shareholders of an S corporation.

An S corporation may not amortize its organization expenses.

Claude Bergeron sold 1,000 shares of Ditta, Inc., an S corporation, for $12,000. He had owned the stock for three years and had a stock basis of $111,000 in the shares. Claude is single, and he is the original owner of the § 1244 stock shares. Calculate the appropriate tax treatment.

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

The amount of any distribution to an S corporation shareholder is equal to the ____________________ plus the fair market value of any other property distributed.

Gene Grams is a 45% owner of a calendar year S corporation during 2015. His beginning stock basis is $230,000, and the S corporation reports the following items. Calculate Grams's stock basis at year-end.

The passive investment income of an S corporation includes gains from the sale of securities.

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

What statement is correct with respect to an S corporation?

Most limited liability partnerships can own stock in an S corporation.

Identify a disadvantage of being an S corporation.

Distribution of loss property by an S corporation to a shareholder generally should be _________________.

An S corporation cannot incur a tax liability at the corporation level.

Which statement is incorrect?

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

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

Advise your client how income, expenses, gain, and losses are allocated to shareholders of an S corporation.

An S corporation may not amortize its organization expenses.

Claude Bergeron sold 1,000 shares of Ditta, Inc., an S corporation, for $12,000. He had owned the stock for three years and had a stock basis of $111,000 in the shares. Claude is single, and he is the original owner of the § 1244 stock shares. Calculate the appropriate tax treatment.

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

The amount of any distribution to an S corporation shareholder is equal to the ____________________ plus the fair market value of any other property distributed.

Gene Grams is a 45% owner of a calendar year S corporation during 2015. His beginning stock basis is $230,000, and the S corporation reports the following items. ​ Calculate Grams's stock basis at year-end.

The passive investment income of an S corporation includes gains from the sale of securities.

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

What statement is correct with respect to an S corporation?

Most limited liability partnerships can own stock in an S corporation.

Identify a disadvantage of being an S corporation.

Distribution of loss property by an S corporation to a shareholder generally should be _________________.

An S corporation cannot incur a tax liability at the corporation level.

Which statement is incorrect?

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

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

Gene Grams is a 45% owner of a calendar year S corporation during 2015. His beginning stock basis is $230,000, and the S corporation reports the following items. Calculate Grams's stock basis at year-end.