Question 1

Depreciation recapture income is a Schedule K item on the Form 1120S.

Accepted Answer

A) True 
 B)False

Question 2

An S corporation with substantial AEP records operating revenues of $410,000, taxable interest income of $390,000, operating expenses of $260,000, and deductions attributable to the interest of $150,000. The passive income penalty tax payable, if any, is:

Accepted Answer

A)  $0. 
B)  $40,923. 
C)  $116,923. 
D)  $136,500. 
A)  $0. 
B)  $40,923. 
C)  $116,923. 
D)  $136,500.

Question 3

Distributions of appreciated property by an S corporation are not taxable to the entity.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following reduces a shareholder's S corporation stock basis?

Accepted Answer

A)  Depletion deductions in excess of the basis of property. 
B)  Illegal kickbacks paid. 
C)  Nontaxable income. 
D)  Sales. 
A)  Depletion deductions in excess of the basis of property. 
B)  Illegal kickbacks paid. 
C)  Nontaxable income. 
D)  Sales.

Question 5

Which item is not included in an S corporation's nonseparately computed income?

Accepted Answer

A)  Net sales. 
B)  Cost of goods sold. 
C)  Dividends received. 
D)  Depreciation recapture. 
A)  Net sales. 
B)  Cost of goods sold. 
C)  Dividends received. 
D)  Depreciation recapture.

Question 6

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to S status on February 14. By the end of the year, $60,000 of these receivables are collected. Calculate any built-in gains tax, assuming that there is sufficient taxable income.

Accepted Answer

A)  $0 
B)  $10,000 
C)  $21,000 
D)  $35,000 
E)  Some other amount 
A)  $0 
B)  $10,000 
C)  $21,000 
D)  $35,000 
E)  Some other amount

Question 7

For a new corporation, a premature S election may not be effective.

Accepted Answer

A) True 
 B)False

Question 8

On January 2, 2014, Tim loans his S corporation $10,000. By the end of 2014, Tim's stock basis is zero, and the basis in his note has been reduced to $8,000. During 2015, the company's operating income is $10,000. The company makes 2015 distributions to Tim of $8,000. Tim reports a(n):

Accepted Answer

A)  $2,000 LTCG. 
B)  $8,000 LTCG. 
C)  Stock basis of $2,000. 
D)  Loan basis of $10,000. 
A)  $2,000 LTCG. 
B)  $8,000 LTCG. 
C)  Stock basis of $2,000. 
D)  Loan basis of $10,000.

Question 9

If a resident alien shareholder moves outside the U.S., the S election is terminated.

Accepted Answer

A) True 
 B)False

Question 10

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.

Accepted Answer

A) True 
 B)False

Question 11

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

Accepted Answer

A) True 
 B)False

Question 12

An S shareholder's stock basis can be reduced below zero.

Accepted Answer

A) True 
 B)False

Question 13

Post-termination distributions that are charged against OAA are received tax-free.

Accepted Answer

A) True 
 B)False

Question 14

If any entity electing S status is currently a C corporation, NOL carryovers from prior years ____________________ be used in an S corporation year.

Accepted Answer

The answer of If any entity electing S status is...

Question 15

A distribution from OAA is taxable.

Accepted Answer

A) True 
 B)False

Depreciation recapture income is a Schedule K item on the Form 1120S.

An S corporation with substantial AEP records operating revenues of $410,000, taxable interest income of $390,000, operating expenses of $260,000, and deductions attributable to the interest of $150,000. The passive income penalty tax payable, if any, is:

Distributions of appreciated property by an S corporation are not taxable to the entity.

Which of the following reduces a shareholder's S corporation stock basis?

Which item is not included in an S corporation's nonseparately computed income?

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to S status on February 14. By the end of the year, $60,000 of these receivables are collected. Calculate any built-in gains tax, assuming that there is sufficient taxable income.

For a new corporation, a premature S election may not be effective.

On January 2, 2014, Tim loans his S corporation $10,000. By the end of 2014, Tim's stock basis is zero, and the basis in his note has been reduced to $8,000. During 2015, the company's operating income is $10,000. The company makes 2015 distributions to Tim of $8,000. Tim reports a(n):

If a resident alien shareholder moves outside the U.S., the S election is terminated.

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

An S shareholder's stock basis can be reduced below zero.

Post-termination distributions that are charged against OAA are received tax-free.

If any entity electing S status is currently a C corporation, NOL carryovers from prior years ____________________ be used in an S corporation year.

A distribution from OAA is taxable.

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

Depreciation recapture income is a Schedule K item on the Form 1120S.

An S corporation with substantial AEP records operating revenues of $410,000, taxable interest income of $390,000, operating expenses of $260,000, and deductions attributable to the interest of $150,000. The passive income penalty tax payable, if any, is:

Distributions of appreciated property by an S corporation are not taxable to the entity.

Which of the following reduces a shareholder's S corporation stock basis?

Which item is not included in an S corporation's nonseparately computed income?

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to S status on February 14. By the end of the year, $60,000 of these receivables are collected. Calculate any built-in gains tax, assuming that there is sufficient taxable income.

For a new corporation, a premature S election may not be effective.

On January 2, 2014, Tim loans his S corporation $10,000. By the end of 2014, Tim's stock basis is zero, and the basis in his note has been reduced to $8,000. During 2015, the company's operating income is $10,000. The company makes 2015 distributions to Tim of $8,000. Tim reports a(n):

If a resident alien shareholder moves outside the U.S., the S election is terminated.

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

An S shareholder's stock basis can be reduced below zero.

Post-termination distributions that are charged against OAA are received tax-free.

If any entity electing S status is currently a C corporation, NOL carryovers from prior years ____________________ be used in an S corporation year.

A distribution from OAA is taxable.

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