Exam 12: S Corporations

If an S corporation has C corporation E & P and passive investment income in excess of ____________________ % of its gross receipts for ____________________ consecutive taxable years, the S election is terminated at the beginning of the ____________________ year.

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

On December 31, 2016, Erica Sumners owns one share of an S corporation's 10 outstanding shares of stock. The basis of Erica's share is $300. During 2017, the S corporation incurs a loss of $3,650. Determine the amount of the loss allocated to Erica, and calculate her stock basis at the end of 2017.

Amit, Inc., an S corporation, holds an AAA balance of $614,000 at the beginning of the tax year. During the year, the following items occur. Operating income \ 501,000 Interest income 6,500 Dividend income 13,020 Municipal bond interest income 6,000 Long-term capital loss from sale of investment land 7,400 Section 179 depreciation deduction 6,000 Charitable contributions 19,000 Cash distributions 57,000 ? Amit's ending AAA balance is:

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

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

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

All tax preference items flow through the S corporation, to be included in the shareholders' AMT calculations.

You are a 60% owner of an S corporation. Calculate your ending stock basis, based upon these facts. Beginning stock basis \ 52,600 Purchases of additional stock 15,000 Insurance premiums paid (nondeductible) 3,600 Tax-exempt interest income 5,230 Payroll tax penalty 3,770 Increase in AAA 22,400 Increase in O A A 5,800

During 2016, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. On December 31, 2015, his stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. It has no accumulated E & P. Which statement is correct?

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

S corporations are treated as partnerships under state property laws.

A calendar year C corporation reports a $41,000 NOL in 2015, but it elects S status for 2016 and generates an NOL of $30,000 in that year. At all times during 2016, 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 2016. How much of the 2016 loss, if any, is deductible by Kris?

Non-separately computed loss ____________________ a S shareholder's stock basis.

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

An S corporation is subject to the following tax.

____________________ husband and wife must consent to an S election if they own their stock jointly.

Which could constitute a second class of stock?

A termination occurs on the day that a corporation ____________________ to be an S corporation.

Samantha owned 1,000 shares in Evita, Inc., an S corporation, that uses the calendar year. On October 11, Samantha sells all of her Evita stock. Her stock basis at the beginning of the tax year was $60,000. Evita's ordinary income for the year was $22,000, and she receives a distribution of $35,000 on May 3rd. Her stock basis at the time of the sale is: