Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

NOL carryovers from C years can be used in an S corporation year against ordinary income.

Accepted Answer

A) True 
 B)False

Question 3

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

Accepted Answer

A) True 
 B)False

Question 4

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 5

You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis. $$\begin{array} { l r } 
\text { Owner's beginning stock basis } & \$ 36,800 \
\text { Increase in AAA } & 32,000 \
\text { Increase in } O A A & 6,300 \
\text { Payroll tax penalty } & 2,140 \
\text { Tax-exempt interest income } & 4,800 \
\text { Insurance premiums paid (nondeductible) } & 2,700 \
\text { Owner's purchases of additional stock } & 22,000
\end{array}$$ ?

Accepted Answer

A) $71,600 
B) $74,120 
C) $76,220 
D) $78,920 
A) $71,600 
B) $74,120 
C) $76,220 
D) $78,920

Question 6

Since loss property receives a ____________________ in basis without any loss recognition, S corporation distributions of loss property should be ____________________.

Accepted Answer

The answer of Since loss property receives a ____________________ in...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

An S corporation that has total assets of at least $50 million on Schedule L at the end of the tax year must file a Schedule M-3.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Question 11

The Section 179 expense deduction is a Schedule K item on the Form 1120S.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Tax-exempt income is listed on Schedule ____________________and ​ of Form 1120S.

Accepted Answer

The answer of Tax-exempt income is listed on Schedule ____________________and...

Question 14

The passive investment income of an S corporation includes net capital gains from the sale of stocks and securities.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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

Accepted Answer

A) True 
 B)False

Question 17

Kinney, Inc., an electing S corporation, holds $5,000 of AEP and $9,000 in AAA at the beginning of the calendar tax year. Kinney has two shareholders, Eric and Maria, each of whom owns 500 shares of Kinney's stock. Kinney's taxable income is $6,000 for the year. Kinney distributes $6,000 to each shareholder on February 1, and it distributes another $3,000 to each shareholder on September 1. How is Erin taxed on the distribution?

Accepted Answer

A) $500 dividend income. 
B) $1,000 dividend income. 
C) $1,500 dividend income. 
D) $3,000 dividend income. 
E) None of the above. 
A) $500 dividend income. 
B) $1,000 dividend income. 
C) $1,500 dividend income. 
D) $3,000 dividend income. 
E) None of the above.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Shareholders owning a(n) ____________________ of shares (voting and nonvoting) may ____________________ revoke an election.

Accepted Answer

majority,

Question 20

In the case of a complete termination of an S corporation interest, a ____________________ tax year may occur.

Accepted Answer

The answer of In the case of a complete termination...

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

NOL carryovers from C years can be used in an S corporation year against ordinary income.

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

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

Since loss property receives a in basis without any loss recognition, S corporation distributions of loss property should be .

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

An S corporation that has total assets of at least $50 million on Schedule L at the end of the tax year must file a Schedule M-3.

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

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

The Section 179 expense deduction is a Schedule K item on the Form 1120S.

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

Tax-exempt income is listed on Schedule ____________________and of Form 1120S.

The passive investment income of an S corporation includes net capital gains from the sale of stocks and securities.

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

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

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

Shareholders owning a(n) of shares (voting and nonvoting) may revoke an election.

In the case of a complete termination of an S corporation interest, a ____________________ tax year may occur.

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

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 12: S Corporations

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

NOL carryovers from C years can be used in an S corporation year against ordinary income.

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

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

Since loss property receives a ____________________ in basis without any loss recognition, S corporation distributions of loss property should be ____________________.

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

An S corporation that has total assets of at least $50 million on Schedule L at the end of the tax year must file a Schedule M-3.

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

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

The Section 179 expense deduction is a Schedule K item on the Form 1120S.

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

Tax-exempt income is listed on Schedule ____________________and ​ of Form 1120S.

The passive investment income of an S corporation includes net capital gains from the sale of stocks and securities.

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

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

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

Shareholders owning a(n) ____________________ of shares (voting and nonvoting) may ____________________ revoke an election.

In the case of a complete termination of an S corporation interest, a ____________________ tax year may occur.

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

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Since loss property receives a in basis without any loss recognition, S corporation distributions of loss property should be .

Tax-exempt income is listed on Schedule ____________________and of Form 1120S.

Shareholders owning a(n) of shares (voting and nonvoting) may revoke an election.