Question 1

Realized gain is recognized by an S corporation on its distribution of ____________________ property.

Accepted Answer

The answer of Realized gain is recognized by an S...

Question 2

Which item has no effect on an S corporation's AAA?

Accepted Answer

A) Stock purchase by a shareholder. 
B) Interest expense. 
C) Cost of goods sold. 
D) Capital loss. 
E) All of the above modify AAA. 
A) Stock purchase by a shareholder. 
B) Interest expense. 
C) Cost of goods sold. 
D) Capital loss. 
E) All of the above modify AAA.

Question 3

During 2015,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.On December 31,2014,his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

Accepted Answer

A) Nutt recognizes a $1,000 LTCG. 
B) Nutt's stock basis will be $2,000. 
C) Nutt's ordinary income is $15,000. 
D) Nutt's tax-free return of capital is $11,000. 
E) None of the above. 
A) Nutt recognizes a $1,000 LTCG. 
B) Nutt's stock basis will be $2,000. 
C) Nutt's ordinary income is $15,000. 
D) Nutt's tax-free return of capital is $11,000. 
E) None of the above.

Question 4

____________________ husband and wife must consent to an S election if they own their stock jointly.

Accepted Answer

The answer of ____________________ husband and wife must consent to...

Question 5

Which tax provision does not apply to an S corporation?

Accepted Answer

A) DPAD. 
B) Section 1244 stock. 
C) Penalty for failure to file. 
D) 10% charitable contribution limitation. 
E) Estimated tax payments. 
A) DPAD. 
B) Section 1244 stock. 
C) Penalty for failure to file. 
D) 10% charitable contribution limitation. 
E) Estimated tax payments.

Question 6

A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

Accepted Answer

A) True 
 B)False

Question 7

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

Accepted Answer

A) True 
 B)False

Question 8

The Schedule M-3 is the same for a C corporation and an S corporation.

Accepted Answer

A) True 
 B)False

Question 9

What statement is correct with respect to an S corporation?

Accepted Answer

A) There are now more LLCs than S corporations. 
B) S corporation status allows shareholders immediately to realize tax benefits from corporate losses. 
C) An S corporation is prohibited from being a member of an affiliated group. 
D) An LLP may own stock in an S corporation. 
E) None of the above statements is correct. 
A) There are now more LLCs than S corporations. 
B) S corporation status allows shareholders immediately to realize tax benefits from corporate losses. 
C) An S corporation is prohibited from being a member of an affiliated group. 
D) An LLP may own stock in an S corporation. 
E) None of the above statements is correct.

Question 10

With respect to passive losses,there are three classes of income,losses,and credits: ____________________,____________________,and passive.

Accepted Answer

active,por

Question 11

Which,if any,of the following items decreases an S corporation's AAA?

Accepted Answer

A) Section 1231 loss. 
B) Expenses related to tax-exempt income. 
C) Depletion in excess of basis. 
D) Distribution from earnings and profits. 
E) None of the above affects the AAA. 
A) Section 1231 loss. 
B) Expenses related to tax-exempt income. 
C) Depletion in excess of basis. 
D) Distribution from earnings and profits. 
E) None of the above affects the AAA.

Question 12

Which statement is incorrect?

Accepted Answer

A) S corporations are treated as corporations under state law. 
B) S corporations are treated as partnerships for Federal income tax purposes. 
C) Distributions of appreciated property are taxable to the S corporation. 
D) None of the above statements is incorrect. 
A) S corporations are treated as corporations under state law. 
B) S corporations are treated as partnerships for Federal income tax purposes. 
C) Distributions of appreciated property are taxable to the S corporation. 
D) None of the above statements is incorrect.

Question 13

Pepper,Inc. ,an S corporation,holds a $1 million balance in accumulated E&P.It reports sales revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable,if any?

Accepted Answer

A) $380,000. 
B) $185,000. 
C) $40,895. 
D) $0. 
E) Some other amount. 
A) $380,000. 
B) $185,000. 
C) $40,895. 
D) $0. 
E) Some other amount.

Question 14

Which item is not included in an S corporation's nonseparately computed income?

Accepted Answer

A) Net sales. 
B) Cost of goods sold. 
C) Dividends received. 
D) Depreciation recapture. 
A) Net sales. 
B) Cost of goods sold. 
C) Dividends received. 
D) Depreciation recapture.

Question 15

Which of these tax provisions does not apply to an S corporation?

Accepted Answer

A) Section 1244 stock. 
B) "Partial liquidation" stock redemption. 
C) Tax-free "A" reorganization. 
D) Section 1202 capital gain exclusion. 
A) Section 1244 stock. 
B) "Partial liquidation" stock redemption. 
C) Tax-free "A" reorganization. 
D) Section 1202 capital gain exclusion.

Question 16

On January 2,2014,David loans his S corporation $10,000.By the end of 2014 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2015,the company's operating income is $10,000.The company makes 2015 distributions to David of $11,000.David reports a(n):

Accepted Answer

A) $1,000 LTCG. 
B) $3,000 LTCG. 
C) $11,000 LTCG. 
D) Loan basis of $10,000. 
A) $1,000 LTCG. 
B) $3,000 LTCG. 
C) $11,000 LTCG. 
D) Loan basis of $10,000.

Exam 22: S Corporations

Realized gain is recognized by an S corporation on its distribution of ____________________ property.

Which item has no effect on an S corporation's AAA?

During 2015,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.On December 31,2014,his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

____________________ husband and wife must consent to an S election if they own their stock jointly.

Which tax provision does not apply to an S corporation?

A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

The Schedule M-3 is the same for a C corporation and an S corporation.

What statement is correct with respect to an S corporation?

With respect to passive losses,there are three classes of income,losses,and credits: ____________________,____________________,and passive.

Which,if any,of the following items decreases an S corporation's AAA?

Which statement is incorrect?

Pepper,Inc. ,an S corporation,holds a $1 million balance in accumulated E&P.It reports sales revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable,if any?

Which item is not included in an S corporation's nonseparately computed income?

Which of these tax provisions does not apply to an S corporation?

On January 2,2014,David loans his S corporation $10,000.By the end of 2014 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2015,the company's operating income is $10,000.The company makes 2015 distributions to David of $11,000.David reports a(n):

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

With respect to passive losses,there are three classes of income,losses,and credits: ,,and passive.