Exam 12: S Corporations

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Which statement is incorrect with respect to an S shareholder's consent?

The § 1202 exclusion of _________________ on the disposition of small business stock (is/is not) _________________ available for S stock.

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

Gene Grams is a 45% owner of a calendar year S corporation during the tax year. His beginning stock basis is $230,000, and the S corporation reports the following items. Ordinary income \ 72,000 Short-term capital gain 16,000 \S1231 loss 6,000 Tax-exempt interest income 5,000 ? Calculate Grams's stock basis at year-end.

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

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

Which statement is incorrect?

On January 1, Bobby and Alice own equally all of the stock of an electing S corporation called Prairie Dirt Delight. The dirt company has a $60,000 loss for a non-leap year. On the 200th day of the year (not a leap year), Bobby sells his one-half of the stock to his son, Saul. How much of the $60,000 loss, if any, is allocated to Bobby?

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

Towne, Inc., a calendar year S corporation, holds AAA of $627,050 at the beginning of the tax year. During the year, the following items occur. Sales income \ 216,000 Loss from real estate operations (4,000) Officers' life insurance proceeds 100,000 Premiums paid for officers' life insurance (3,600) Dividend income 17,000 Interest income 3,000 Charitable contributions (22,000) \S179 depreciation expense (2,500) Administrative expenses (35,000) Cash distributions to sharehol ders (73,220) ? Calculate Towne's ending AAA balance.

A two-or-more member ____________________ operates under ____________________ tax principles.

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

Oxen Corporation incurs the following transactions. Net income from operations \ 100,000 Interest income from savings account 3,000 Long-term capital gain from sale of securities 10,000 Short-term capital loss from sale of securities 4,000 ? Oxen maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder, Megan. As a result, Megan must recognize:

An S corporation's LIFO recapture amount equals the excess of the inventory's value under ____________________ over the ____________________ value.

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.

If an S corporation's beginning balance in OAA is zero, and the following transactions occur, what is the ending OAA balance? Depreciation recapture income \ 21,000 Payroll tax penalty 4,200 Tax-exempt interest income 5,300 Nontaxable life insurance proceeds 5,100 Life insurance premiums paid (nondeductible) 2,800 ?

Depreciation recapture income is a ____________________ computed amount.

An estate may be a shareholder of an S corporation.

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.