Exam 22: S Corporations

Towne,Inc. ,a calendar year S corporation,holds AAA of $627,050 at the beginning of 2015.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) § 179 depreciation expense (2,500) Administrative expenses (35,000) Cash distributions to shareholders (73,220) ​ Calculate Towne's ending AAA balance.

During 2015,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:

Fred is the sole shareholder of an S corporation in Fort Deposit,Alabama.At a time when his stock basis is $20,000,the corporation distributes appreciated property worth $100,000 (basis of $20,000).Fred's taxable gain is:

An S corporation cannot be a shareholder in another corporation.

The corporate-level tax on recognized built-in gains applies in 2015 when an S corporation disposes of an asset in a taxable disposition within ten years after the date on which the S election took effect.

Four unrelated individuals acquire assets on behalf of Jump Corporation on May 21,2015,purchased assets on June 5,2015,and begin doing business on June 15,2015.They subscribe to shares of stock,file articles of incorporation for Jump,and become shareholders on July 23,2015.The S election must be filed no later than 2 1/2 months after:

On December 31,2015,Erica Sumners owns one share of an S corporation's 10 outstanding shares of stock.The basis of Erica's share is $300.During 2016,the S corporation incurs a loss of $3,650.Determine the amount of the loss allocated to Erica,and calculate her stock basis at the end of 2016.

An S corporation with substantial AEP records operating revenues of $410,000,taxable interest income of $390,000,operating expenses of $260,000,and deductions attributable to the interest of $150,000.The passive income penalty tax payable,if any,is:

The maximum number of actual shareholders in an S corporation is:

Depreciation recapture income is a ____________________ computed amount.

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

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 ​

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity,but distributions do not reduce loan basis.

An S corporation that has total assets of at least $10 million on Schedule L at the end of the tax year must file a Schedule M-3.

An S corporation is subject to the following tax.

Which of the following reduces a shareholder's S corporation stock basis?

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to S status on February 14.By the end of the year,$60,000 of these receivables are collected.Calculate any built-in gains tax,assuming that there is sufficient taxable income.

Any distribution made by an S corporation during a tax year is taken into account before accounting for the year's losses.

An S corporation shareholder's stock basis includes his or her direct investments plus a ratable share of any corporate liabilities.

Voting common stock and voting preferred stock (with a preference on dividends) would be treated as ____________________ class(es) of stock.