Question 1

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

Accepted Answer

The answer of The § 1202 exclusion of _________________ on...

Question 2

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

Accepted Answer

A) Tax-exempt interest income. 
B) Section 1231 gain. 
C) Section 179 depreciation deduction. 
D) Depreciation recapture income. 
E) All of the above appear on Schedule K. 
A) Tax-exempt interest income. 
B) Section 1231 gain. 
C) Section 179 depreciation deduction. 
D) Depreciation recapture income. 
E) All of the above appear on Schedule K.

Question 3

An S corporation may not amortize its organization expenses.

Accepted Answer

A) True 
 B)False

Question 4

Which corporation is eligible to make the S election?

Accepted Answer

A) Non-U.S.corporation. 
B) Limited liability company. 
C) Insurance company. 
D) U.S.bank. 
E) None of the above can select S status. 
A) Non-U.S.corporation. 
B) Limited liability company. 
C) Insurance company. 
D) U.S.bank. 
E) None of the above can select S status.

Question 5

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

Accepted Answer

A) A partnership. 
B) A nonresident alien. 
C) A voting trust. 
D) The estate of a deceased shareholder. 
A) A partnership. 
B) A nonresident alien. 
C) A voting trust. 
D) The estate of a deceased shareholder.

Question 6

Only 51% of the shareholders must consent to an S election.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

Accepted Answer

A) Husband Jaime and wife Maria count as one shareholder. 
B) Grandmother Adela and granddaughter Maria count as one shareholder. 
C) Husband Jaime and the estate of wife Maria count as one shareholder. 
D) Husband Jaime and ex-wife Isabel count as one shareholder. 
E) None of the above statements is incorrect. 
A) Husband Jaime and wife Maria count as one shareholder. 
B) Grandmother Adela and granddaughter Maria count as one shareholder. 
C) Husband Jaime and the estate of wife Maria count as one shareholder. 
D) Husband Jaime and ex-wife Isabel count as one shareholder. 
E) None of the above statements is incorrect.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Alomar,a cash basis S corporation in Orlando,Florida,holds the following assets and liabilities on January 1,2015,the date the S election is made. Adjusted Basis Fair Market Value Cash $ 200,000 $ 200,000 Accounts receivable -0- 105,000 Equipment 110,000 100,000 Land 1,800,000 2,500,000 Accounts payable -0- 110,000 ​ During 2015,Alomar collects the accounts receivable and pays the accounts payable.The land is sold for $3 million,and the taxable income for the year is $590,000.Calculate any built-in gains tax.

Accepted Answer

$206,500.The net unrealized built-in gai

Question 11

Some ____________________ taxation rules apply to an S corporation.

Accepted Answer

partnershi

Question 12

Advise your client how income,expenses,gain,and losses are allocated to shareholders of an S corporation.

Accepted Answer

In general,S corporation items are divid

Question 13

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...

Question 14

An S corporation recognizes a ____________________ on any distribution of appreciated property.

Accepted Answer

The answer of An S corporation recognizes a ____________________ on...

Question 15

An S corporation is limited to a theoretical maximum of ____________________ shareholders.

Accepted Answer

The answer of An S corporation is limited to a...

Question 16

Which could constitute a second class of stock?

Accepted Answer

A) Treasury stock. 
B) Phantom stock. 
C) Unexercised stock options. 
D) Warrants. 
E) None of the above. 
A) Treasury stock. 
B) Phantom stock. 
C) Unexercised stock options. 
D) Warrants. 
E) None of the above.

Question 17

An item that appears in the "Other Adjustments Account" affects stock basis,but not AAA,such as tax-exempt interest.

Accepted Answer

A) True 
 B)False

Question 18

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 19

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

Accepted Answer

A) Payroll penalty. 
B) Unreasonable compensation. 
C) Life insurance proceeds (nontaxable to the recipient S corporation). 
D) Taxable interest. 
E) None of the above affects the OAA. 
A) Payroll penalty. 
B) Unreasonable compensation. 
C) Life insurance proceeds (nontaxable to the recipient S corporation). 
D) Taxable interest. 
E) None of the above affects the OAA.

Question 20

Pepper,Inc. ,an S corporation in Norfolk,Virginia,has revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.Calculate any passive investment income penalty tax payable by this corporation.

Accepted Answer

The S corporation pays a § 1375 penalty

Exam 22: S Corporations

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

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

An S corporation may not amortize its organization expenses.

Which corporation is eligible to make the S election?

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

Only 51% of the shareholders must consent to an S election.

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

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

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

Some ____________________ taxation rules apply to an S corporation.

Advise your client how income,expenses,gain,and losses are allocated to shareholders of an S corporation.

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

An S corporation recognizes a ____________________ on any distribution of appreciated property.

An S corporation is limited to a theoretical maximum of ____________________ shareholders.

Which could constitute a second class of stock?

An item that appears in the "Other Adjustments Account" affects stock basis,but not AAA,such as tax-exempt interest.

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

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

Pepper,Inc. ,an S corporation in Norfolk,Virginia,has revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.Calculate any passive investment income penalty tax payable by this corporation.

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

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

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