Exam 12: S Corporations

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

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

An S corporation recognizes a ____________________ on any distribution of appreciated property.

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

On January 2, 2015, David loans his S corporation $10,000. By the end of 2015 David's stock basis is zero and the basis in his note has been reduced to $8,000. During 2016, the company's operating income is $10,000. The company makes 2016 distributions to David of $11,000. David reports a(n):

Voting common stock and voting preferred stock (with a preference on dividends) would be treated as ____________________ class(es) of stock.

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

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.

Alomar, a cash basis S corporation in Orlando, Florida, holds the following assets and liabilities on January 1, 2016, the date the S election is made. Adjusted Basis Fair Market Value Cash \ 200,000 \ 200,000 Accounts receivable -0- 105,000 Equipment 110,000 100,000 Land 1,800,000 2,500,000 Accounts payable -0- 110,000 ​ During 2016, Alomar collects the accounts receivable and pays the accounts payable. The land is sold for $3 million, and the taxable income for the year is $590,000. Calculate any built-in gains tax.

You are given the following facts about a solely owned S corporation. What is the shareholder's ending stock basis? Increase in AAA \ 31,000 Increase in OAA 6,300 Payroll tax penalty 2,140 Beginning stock basis 39,800 Stock purchases 22,000 Tax-exempt insurance proceeds 4,800 Insurance premiums paid (nondeductible) 2,700 ?

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

An S corporation must possess which of the following characteristics?

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

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

A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

Which corporation is eligible to make the S election?

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

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

Randall owns 800 shares in Fabrication, Inc., an S corporation in Moss Hill, Texas. For this tax year, the basis in his stock is $30,000, before the adjustment for this year's losses. Randall's share of the corporation's ordinary loss is $20,000, and his share of its capital loss is $15,000. How much can Randall deduct due to these losses?

Estella, Inc., a calendar year S corporation, incurred the following items during the tax year. Municipal bond interest \ 7,000 Sales 120,000 Depreciation recapture income 14,000 Long-term capital gain 20,000 Cost of goods sold (42,000) Administrative expenses (15,000) Depreciation expense (13,000) Charitable contributions (10,000) ​ Calculate Estella's nonseparately computed income.