Question 1

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

Accepted Answer

majority,voluntarily

Question 2

As with partnerships,the income,deductions,and tax credits of an S corporation ____________________ to the shareholders annually.

Accepted Answer

flow through

Question 3

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

Accepted Answer

FIFO,LIFO

Question 4

A capital loss allocated to a shareholder always reduces the Other Adjustments Account.

Accepted Answer

A) True 
 B)False

Question 5

Grams,Inc. ,a calendar year S corporation is a manufacturer of widgets.Grams reports $20,000 DPGR and $15,000 of wages;its S corporation's QPAI is $5,000.Janet owns a 40% interest in the S corporation.All expenses that reduce DPGR are from wages,and all wages paid relate to DPGR.How much QPAI and wages are allocated to Janet?

Accepted Answer

A) None. 
B) $2,000 and $6,000. 
C) $5,000 and $15,000. 
D) $5,000 and $20,000. 
A) None. 
B) $2,000 and $6,000. 
C) $5,000 and $15,000. 
D) $5,000 and $20,000.

Question 6

Most IRAs cannot own stock in an S corporation.

Accepted Answer

A) True 
 B)False

Question 7

Depreciation recapture income is a Schedule K item on the Form 1120S.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) A consent extension is available only if Form 2553 is filed on a timely basis,reasonable cause is given,and the interests of the government are not jeopardized. 
B) Both husband and wife must consent if one owns the stock as community property. 
C) An S election requires a consent from all of the S corporation's shareholders. 
D) A consent must be in writing. 
E) None of the above statements is incorrect. 
A) A consent extension is available only if Form 2553 is filed on a timely basis,reasonable cause is given,and the interests of the government are not jeopardized. 
B) Both husband and wife must consent if one owns the stock as community property. 
C) An S election requires a consent from all of the S corporation's shareholders. 
D) A consent must be in writing. 
E) None of the above statements is incorrect.

Question 9

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Accepted Answer

A) True 
 B)False

Question 10

There is no need formally to elect to treat ____________________ members as a single shareholder.

Accepted Answer

The answer of There is no need formally to elect...

Question 11

Bidden,Inc. ,a calendar year S corporation,incurred the following items. Sales $130,000 Depreciation recapture income 12,000 Short-term capital gain 30,000 Cost of goods sold (42,000) Municipal bond interest income 7,000 Administrative expenses (15,000) Depreciation expense (17,000) Charitable contributions (14,000) ​ Calculate Bidden's nonseparately computed income.

Accepted Answer

Sales
 $130,000
 Depreciation recapture

Question 12

Most limited liability partnerships can own stock in an S corporation.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

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

Question 14

A per-day,per-share allocation of flow-through S corporation items must be used,unless the shareholder disposes of the entire interest in the entity.

Accepted Answer

A) True 
 B)False

Question 15

If any entity electing S status is currently a C corporation,NOL carryovers from prior years ____________________ be used in an S corporation year.

Accepted Answer

The answer of If any entity electing S status is...

Question 16

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

Accepted Answer

The answer of A termination occurs on the day that...

Question 17

The amount of any distribution to an S corporation shareholder is equal to the ____________________ plus the fair market value of any other property distributed.

Accepted Answer

The answer of The amount of any distribution to an...

Question 18

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

Accepted Answer

A) Operating income. 
B) Long-term capital gain. 
C) Cost of goods sold. 
D) Short-term capital loss. 
E) All of the above affect stock basis. 
A) Operating income. 
B) Long-term capital gain. 
C) Cost of goods sold. 
D) Short-term capital loss. 
E) All of the above affect stock basis.

Question 19

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 20

Mock Corporation converts to S corporation status in 2015.Mock used the LIFO inventory method in 2014 and had a LIFO inventory of $435,000 (FIFO value of $550,000) on the date of the S election.How much tax must be added to Mock's 2014 corporate tax liability,assuming that Mock is subject to a 35% tax rate.

Accepted Answer

A) $0 
B) $10,062.50 
C) $40,250 
D) $115,000 
E) Some other amount 
A) $0 
B) $10,062.50 
C) $40,250 
D) $115,000 
E) Some other amount

Exam 22: S Corporations

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

As with partnerships,the income,deductions,and tax credits of an S corporation ____________________ to the shareholders annually.

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

A capital loss allocated to a shareholder always reduces the Other Adjustments Account.

Most IRAs cannot own stock in an S corporation.

Depreciation recapture income is a Schedule K item on the Form 1120S.

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

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

There is no need formally to elect to treat ____________________ members as a single shareholder.

Most limited liability partnerships can own stock in an S corporation.

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

A per-day,per-share allocation of flow-through S corporation items must be used,unless the shareholder disposes of the entire interest in the entity.

If any entity electing S status is currently a C corporation,NOL carryovers from prior years ____________________ be used in an S corporation year.

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

The amount of any distribution to an S corporation shareholder is equal to the ____________________ plus the fair market value of any other property distributed.

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

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

An Introduction to Taxation and Understanding the Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxabl

Property Transactions: Capital Gains and Losses, section 1231 and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

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

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