Question 1

Which of the following tax levies imposed on an S corporation are required to be paid by using estimated tax payments?

Accepted Answer

A) built-in gains tax 
B) excess net passive income tax 
C) both A and B 
D) none of the above 
A) built-in gains tax 
B) excess net passive income tax 
C) both A and B 
D) none of the above C

Question 2

Identify which of the following statements is true.

Accepted Answer

A) Fringe benefits limited by the more-than-2%-shareholder rule include stock options, group term life insurance premiums, and medical insurance premiums. 
B) A shareholder owning 2% or more of an S corporation's stock, who is also an employee of the corporation, must include all statutory fringe benefits in gross income on his/her individual return. 
C) Section 318 stock attribution rules are used to define 2% or more shareholders of S corporation's stock. 
D) All of the above are false. 
A) Fringe benefits limited by the more-than-2%-shareholder rule include stock options, group term life insurance premiums, and medical insurance premiums. 
B) A shareholder owning 2% or more of an S corporation's stock, who is also an employee of the corporation, must include all statutory fringe benefits in gross income on his/her individual return. 
C) Section 318 stock attribution rules are used to define 2% or more shareholders of S corporation's stock. 
D) All of the above are false. B

Question 3

Even if the termination of an S election is considered to be inadvertent, the election to terminate is irrevocable.

Accepted Answer

A) True 
 B)False  False

Question 4

Krause Corporation makes an S election, believing that it has no current or accumulated E&P. However, after an IRS audit, Krause is found to have failed the passive investment income test for three consecutive years and also to have a Subchapter C E&P balance from its three pre-election tax years. The IRS will

Accepted Answer

A) automatically terminate the election and Krause cannot reelect for a 5-year time period. 
B) retroactively revoke the election to the first day on which it was effective and Krause will not be able to reelect. 
C) treat the error as such and allow the election to continue unbroken. 
D) likely treat the termination as inadvertent and will probably approve a continued S election if the corporation distributes the Subchapter C E&P. 
A) automatically terminate the election and Krause cannot reelect for a 5-year time period. 
B) retroactively revoke the election to the first day on which it was effective and Krause will not be able to reelect. 
C) treat the error as such and allow the election to continue unbroken. 
D) likely treat the termination as inadvertent and will probably approve a continued S election if the corporation distributes the Subchapter C E&P.

Question 5

On June 30 of the current year, the S election of Great Corporation is terminated, thus creating a six-month S short year and a six-month C short year. Great Corporation is a calendar-year taxpayer. The S short-year return is due

Accepted Answer

A) September 15. 
B) December 15. 
C) March 15 of the next year. 
D) June 30 of the next year. 
A) September 15. 
B) December 15. 
C) March 15 of the next year. 
D) June 30 of the next year.

Question 6

Bellows Corporation, a calendar-year taxpayer, has been an S corporation for ten years. Last year, John sold all the Bellows stock to Micky. Payments for the stock are to be made over a five-year period. In March of next year, Micky fails to make the necessary payments and John repossesses the stock. During the time Micky holds the stock, Bellows Corporation revokes its S election. Can Bellows Corporation reelect S status?

Accepted Answer

Yes, Bellows Corporation can i

Question 7

David owns 25% of an S corporation's stock (a capital asset)for the first three months of the S corporation's tax year. During the year, the S corporation has $16,000 of ordinary income and $32,000 of long-term capital gain. David starts the year with a basis of $50,000 in his S corporation stock and sells the stock for $56,000 on April 1 of the year. Assuming all months have 30 days, how much gain/loss does David report on the sale of the stock and what is its character?

Accepted Answer

[$50,000 + ($16,000

Question 8

Identify which of the following statements is true.

Accepted Answer

A) An S corporation may be subject to the corporate alternative minimum tax. 
B) Allocation of tax preference items for AMT generally occurs on a daily basis. 
C) An S corporation may be subject to the corporate alternative minimum tax when the corporation has accumulated E&P from prior C corporation tax years. 
D) All of the above are false. 
A) An S corporation may be subject to the corporate alternative minimum tax. 
B) Allocation of tax preference items for AMT generally occurs on a daily basis. 
C) An S corporation may be subject to the corporate alternative minimum tax when the corporation has accumulated E&P from prior C corporation tax years. 
D) All of the above are false.

Question 9

Which of the following would terminate a Subchapter S election?

Accepted Answer

A) Estate becomes a shareholder. 
B) Grantor trust becomes a shareholder. 
C) Voting trust becomes a shareholder. 
D) Partnership becomes a shareholder. 
A) Estate becomes a shareholder. 
B) Grantor trust becomes a shareholder. 
C) Voting trust becomes a shareholder. 
D) Partnership becomes a shareholder.

Question 10

Connie's Restaurant has been an S corporation since it was formed in 2006. Its results for the previous year are as follows:   What are Connie's separately stated items? What is the S corporation's ordinary income?

Accepted Answer

The separately stated items, o

Question 11

Train Corporation is an S corporation that is owned equally by Carlos and Diane at the beginning of the year. On April 21 (the 111th day of Train's tax year)of the current year, Carlos sells all of his Train Corporation stock to Andre. How many days will be used when computing Carlos's share of S corporation income for this year (a non-leap year), assuming that a special income allocation election is not made?

Accepted Answer

A) 110 
B) 111 
C) 254 
D) 255 
A) 110 
B) 111 
C) 254 
D) 255

Question 12

Identify which of the following statements is true.

Accepted Answer

A) The natural business year for fiscal-year election purposes is any tax year that ends within six months after the peak period of business. 
B) Section 444 permits an S corporation to elect to use a fiscal year other than a permitted year. 
C) A new corporation that is 100% owned by Johnny Blake, a cash method of accounting taxpayer, makes an S election for its initial tax year. The S corporation must also elect to use the cash method of accounting as its overall accounting method. 
D) All of the above are false. 
A) The natural business year for fiscal-year election purposes is any tax year that ends within six months after the peak period of business. 
B) Section 444 permits an S corporation to elect to use a fiscal year other than a permitted year. 
C) A new corporation that is 100% owned by Johnny Blake, a cash method of accounting taxpayer, makes an S election for its initial tax year. The S corporation must also elect to use the cash method of accounting as its overall accounting method. 
D) All of the above are false.

Question 13

List and discuss five advantages and five disadvantages of electing to be taxed as an S corporation over a C corporation or a partnership.

Accepted Answer

Some of the advantages and disadvantages

Question 14

Shamrock Corporation has two classes of common stock outstanding. The Class A and Class B common stock give the shareholders identical rights and interests in the profits and assets of the corporation. Class A has one vote per share. Class B is nonvoting. Can Shamrock Corporation make an S corporation election?

Accepted Answer

Yes, since Shamrock

Question 15

Davies Corporation is a calendar-year taxpayer that is owned equally by Vivian, Rob, Danny, and Doug Davies. At the close of business on May 31, Rob Davies sells his 25% stock interest to Paula Bryan. Which of the following statements about the S election is correct?

Accepted Answer

A) Paula must consent to the S election, otherwise the election terminates at the close of business on May 31. 
B) A new S election form must be filed by June 30 of the same year, with all shareholders consenting to the election. If a new S election is not filed, the election terminates on June 30 of that year. 
C) Paula has 30 days to terminate the S election, otherwise the election remains in place for the entire year and all subsequent years. 
D) None of the above statements are correct. 
A) Paula must consent to the S election, otherwise the election terminates at the close of business on May 31. 
B) A new S election form must be filed by June 30 of the same year, with all shareholders consenting to the election. If a new S election is not filed, the election terminates on June 30 of that year. 
C) Paula has 30 days to terminate the S election, otherwise the election remains in place for the entire year and all subsequent years. 
D) None of the above statements are correct.

Question 16

Dixon Corporation was incorporated on January 1, 2005. The corporation made its S election on April 1, 2008. The corporation retains an E&P balance from its C corporation days. Which one of the following current-year income and expense items is not included in Dixon Corporation's Accumulated Adjustments Account?

Accepted Answer

A) ordinary income or loss 
B) tax-exempt bond interest income 
C) long-term capital gains and losses 
D) amortization of organizational expenditures 
A) ordinary income or loss 
B) tax-exempt bond interest income 
C) long-term capital gains and losses 
D) amortization of organizational expenditures

Question 17

Cactus Corporation, an S Corporation, had accumulated earnings and profits of $100,000 at the beginning of 2018. Tex and Shirley each own 50% of the stock. Cactus does not make any distributions during 2018, but had $200,000 of ordinary income. In 2019, ordinary income was $100,000 and distributions were $100,000. What is Tex's ordinary income for 2019?

Accepted Answer

A) $0 
B) $50,000 
C) $100,000 
D) $200,000 
A) $0 
B) $50,000 
C) $100,000 
D) $200,000

Question 18

Martha, a U.S. citizen, owns 40% of the stock of George Corporation, an electing S corporation. At the time of her death this year, the George stock passes to her estate. The stock is subsequently transferred to a trust provided for in Martha's will. Can the testamentary trust hold the George stock for a two-year period before the S election is terminated?

Accepted Answer

The trust can hold the S corporation sto

Question 19

Identify which of the following statements is true.

Accepted Answer

A) The overall S corporation loss limitation equals the shareholder's adjusted basis for his/her S corporation stock plus his/her ratable share of all S corporation liabilities. 
B) The loss pass-throughs from an S corporation may produce a net operating loss for the shareholder. 
C) An S corporation shareholder can increase the adjusted basis of his/her stock by any indebtedness owed the shareholder by the S corporation. 
D) All of the above are false. 
A) The overall S corporation loss limitation equals the shareholder's adjusted basis for his/her S corporation stock plus his/her ratable share of all S corporation liabilities. 
B) The loss pass-throughs from an S corporation may produce a net operating loss for the shareholder. 
C) An S corporation shareholder can increase the adjusted basis of his/her stock by any indebtedness owed the shareholder by the S corporation. 
D) All of the above are false.

Question 20

April Corporation's Subchapter S election was voluntarily terminated for 2015. The first year that April would be eligible to reelect S corporation status is

Accepted Answer

A) 2016. 
B) 2017. 
C) 2018. 
D) 2020. 
A) 2016. 
B) 2017. 
C) 2018. 
D) 2020.

Which of the following tax levies imposed on an S corporation are required to be paid by using estimated tax payments?

Identify which of the following statements is true.

Even if the termination of an S election is considered to be inadvertent, the election to terminate is irrevocable.

On June 30 of the current year, the S election of Great Corporation is terminated, thus creating a six-month S short year and a six-month C short year. Great Corporation is a calendar-year taxpayer. The S short-year return is due

Identify which of the following statements is true.

Which of the following would terminate a Subchapter S election?

Connie's Restaurant has been an S corporation since it was formed in 2006. Its results for the previous year are as follows: What are Connie's separately stated items? What is the S corporation's ordinary income?

Identify which of the following statements is true.

List and discuss five advantages and five disadvantages of electing to be taxed as an S corporation over a C corporation or a partnership.

Davies Corporation is a calendar-year taxpayer that is owned equally by Vivian, Rob, Danny, and Doug Davies. At the close of business on May 31, Rob Davies sells his 25% stock interest to Paula Bryan. Which of the following statements about the S election is correct?

Identify which of the following statements is true.

April Corporation's Subchapter S election was voluntarily terminated for 2015. The first year that April would be eligible to reelect S corporation status is

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

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Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

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Exam 11: S Corporations

Which of the following tax levies imposed on an S corporation are required to be paid by using estimated tax payments?

Identify which of the following statements is true.

Even if the termination of an S election is considered to be inadvertent, the election to terminate is irrevocable.

On June 30 of the current year, the S election of Great Corporation is terminated, thus creating a six-month S short year and a six-month C short year. Great Corporation is a calendar-year taxpayer. The S short-year return is due

Identify which of the following statements is true.

Which of the following would terminate a Subchapter S election?

Connie's Restaurant has been an S corporation since it was formed in 2006. Its results for the previous year are as follows: What are Connie's separately stated items? What is the S corporation's ordinary income?

Identify which of the following statements is true.

List and discuss five advantages and five disadvantages of electing to be taxed as an S corporation over a C corporation or a partnership.

Davies Corporation is a calendar-year taxpayer that is owned equally by Vivian, Rob, Danny, and Doug Davies. At the close of business on May 31, Rob Davies sells his 25% stock interest to Paula Bryan. Which of the following statements about the S election is correct?

Identify which of the following statements is true.

April Corporation's Subchapter S election was voluntarily terminated for 2015. The first year that April would be eligible to reelect S corporation status is

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters