Question 1

For a new corporation,a premature S election may not be effective.

Accepted Answer

A) True 
 B)False

Question 2

Randall owns 800 shares in Fabrication,Inc. ,an S corporation in Moss Hill,Texas.In 2014,the basis in his stock is $30,000,before the adjustment for this year's losses.During 2015,Randall's share of the corporation's ordinary loss is $20,000,and his share of its capital loss is $15,000.How much can Randall deduct due to these losses?

Accepted Answer

A) No deduction. 
B) $15,000 ordinary loss;$10,000 capital loss. 
C) $17,143 ordinary loss;$12,857 capital loss. 
D) $20,000 ordinary loss;$15,000 capital loss. 
A) No deduction. 
B) $15,000 ordinary loss;$10,000 capital loss. 
C) $17,143 ordinary loss;$12,857 capital loss. 
D) $20,000 ordinary loss;$15,000 capital loss.

Question 3

If a resident alien shareholder moves outside the U.S. ,the S election is terminated.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

What method is used to allocate S corporation income or losses (unless an election to the contrary is made)?

Accepted Answer

A) Any method agreed to by all of the shareholders. 
B) Per-day allocation. 
C) FIFO method. 
D) LIFO method. 
E) Some other method. 
A) Any method agreed to by all of the shareholders. 
B) Per-day allocation. 
C) FIFO method. 
D) LIFO method. 
E) Some other method.

Question 7

Compare the distribution of property rules for an S corporation with the corresponding partnership rules.

Accepted Answer

The major difference involves distributi

Question 8

Gene Grams is a 45% owner of a calendar year S corporation during 2015.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 § 1231 loss 6,000 Tax-exempt interest income 5,000 ​ Calculate Grams's stock basis at year-end.

Accepted Answer

Beginning stock basis
 $230,000
 Ordinar

Question 9

Separately stated items are listed on Schedule _________________________ of the Form 1120S.

Accepted Answer

The answer of Separately stated items are listed on Schedule...

Question 10

An S corporation can claim a deduction for its NOL carryovers.

Accepted Answer

A) True 
 B)False

Question 11

On January 1,2015,Kinney,Inc. ,an electing S corporation,holds $5,000 of AEP and $9,000 in AAA.Kinney has two shareholders,Eric and Maria,each of whom owns 500 shares of Kinney's stock.Kinney's 2015 taxable income is $6,000.Kinney distributes $6,000 to each shareholder on February 1,2015,and distributes another $3,000 to each shareholder on September 1.How is Erin taxed on the distribution?

Accepted Answer

A) $500 dividend income. 
B) $1,000 dividend income. 
C) $1,500 dividend income. 
D) $3,000 dividend income. 
E) None of the above. 
A) $500 dividend income. 
B) $1,000 dividend income. 
C) $1,500 dividend income. 
D) $3,000 dividend income. 
E) None of the above.

Question 12

A distribution from OAA is taxable.

Accepted Answer

A) True 
 B)False

Question 13

Discuss two ways that an S election may be terminated.

Accepted Answer

Broadly,there are two ways of terminatin

Question 14

Chris,the sole shareholder of Taylor,Inc. ,elects during 2015 to terminate the S election,effective January 1,2016.As of the end of 2015,Taylor,Inc. ,holds AAA of $120,000 and OAA of $13,000.Chris receives a cash distribution of $130,000 on January 15,2016.If his stock basis is $220,000 before the distribution,calculate Chris's taxable amount and his ending stock basis.

Accepted Answer

Cash distributions reduce the AAA ($120,

Question 15

Persons who were S shareholders during any part of the year before the election date,but were not shareholders when the election was made,also must consent to an S election.

Accepted Answer

A) True 
 B)False

Question 16

Several individuals acquire assets on behalf of Skip Corporation on May 28,2015,purchased assets on June 3,2015,and began business on June 11,2015.They subscribe to shares of stock,file articles of incorporation for Skip,and become shareholders on June 21,2015.The S election must be filed no later than 2 1/2 months after:

Accepted Answer

A) May 28,2015. 
B) June 3,2015. 
C) June 11,2015. 
D) June 21,2015. 
E) December 31,2015. 
A) May 28,2015. 
B) June 3,2015. 
C) June 11,2015. 
D) June 21,2015. 
E) December 31,2015.

Question 17

Non-separately computed loss ____________________ a S shareholder's stock basis.

Accepted Answer

The answer of Non-separately computed loss ____________________ a S shareholder's...

Question 18

Where the S corporation rules are silent,C corporation provisions apply.

Accepted Answer

A) True 
 B)False

Question 19

The LIFO recapture tax is a variation of the passive investment income penalty tax.

Accepted Answer

A) True 
 B)False

Question 20

S corporations are treated as partnerships under state property laws.

Accepted Answer

A) True 
 B)False

Exam 22: S Corporations

For a new corporation,a premature S election may not be effective.

If a resident alien shareholder moves outside the U.S. ,the S election is terminated.

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

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

What method is used to allocate S corporation income or losses (unless an election to the contrary is made)?

Compare the distribution of property rules for an S corporation with the corresponding partnership rules.

Separately stated items are listed on Schedule _________________________ of the Form 1120S.

An S corporation can claim a deduction for its NOL carryovers.

A distribution from OAA is taxable.

Discuss two ways that an S election may be terminated.

Persons who were S shareholders during any part of the year before the election date,but were not shareholders when the election was made,also must consent to an S election.

Non-separately computed loss ____________________ a S shareholder's stock basis.

Where the S corporation rules are silent,C corporation provisions apply.

The LIFO recapture tax is a variation of the passive investment income penalty tax.

S corporations are treated as partnerships under state property laws.

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