Question 1

For an S corporation to elect to use a fiscal year other than a permitted year,the fiscal year elected must have a maximum deferral period of

Accepted Answer

A)  one month. 
B)  two months. 
C)  three months. 
D)  six months. 
A)  one month. 
B)  two months. 
C)  three months. 
D)  six months.

Question 2

Trusts that can own S corporation stock include all of the following except

Accepted Answer

A)  charitable remainder unitrusts. 
B)  QSSTs. 
C)  grantor trusts. 
D)  testamentary trusts. 
A)  charitable remainder unitrusts. 
B)  QSSTs. 
C)  grantor trusts. 
D)  testamentary trusts.

Question 3

Which of the following corporate tax levies are imposed on an S corporation?

Accepted Answer

A)  corporate income tax 
B)  corporate alternative minimum tax 
C)  accumulated earnings tax 
D)  None of these taxes are imposed on an S corporation. 
A)  corporate income tax 
B)  corporate alternative minimum tax 
C)  accumulated earnings tax 
D)  None of these taxes are imposed on an S corporation.

Question 4

Identify which of the following statements is true.

Accepted Answer

A)  Long-term capital gains may be subject to double taxation if the gains are subject to both the excess net passive income tax rules and the built-in gains tax rules. 
B)  Special allocations of ordinary income or loss and separately stated items that are available for partnerships are also permitted with S corporations. 
C)  When an S corporation's shares are sold by a shareholder during a tax year, the transferee's share of the earnings is reported from the day after the transfer date through the end of the tax year. 
D)  All of the above are false. 
A)  Long-term capital gains may be subject to double taxation if the gains are subject to both the excess net passive income tax rules and the built-in gains tax rules. 
B)  Special allocations of ordinary income or loss and separately stated items that are available for partnerships are also permitted with S corporations. 
C)  When an S corporation's shares are sold by a shareholder during a tax year, the transferee's share of the earnings is reported from the day after the transfer date through the end of the tax year. 
D)  All of the above are false.

Question 5

Identify which of the following statements is false.

Accepted Answer

A)  A C corporation short-year income tax liability must be determined on an annualized basis. 
B)  If the termination of an S election is considered to be inadvertent, then the election is permitted to continue in place as if the termination had never occurred. 
C)  If an S election is terminated and the termination is not considered to be inadvertent, a ten-tax-year waiting period is required before making a new election. 
D)  A corporation can obtain relief for a late S election if the IRS consents. 
A)  A C corporation short-year income tax liability must be determined on an annualized basis. 
B)  If the termination of an S election is considered to be inadvertent, then the election is permitted to continue in place as if the termination had never occurred. 
C)  If an S election is terminated and the termination is not considered to be inadvertent, a ten-tax-year waiting period is required before making a new election. 
D)  A corporation can obtain relief for a late S election if the IRS consents.

Question 6

April Corporation's Subchapter S election was voluntarily terminated for 2010.The first year that April would be eligible to reelect S corporation status is

Accepted Answer

A)  2012. 
B)  2013. 
C)  2014. 
D)  2015. 
A)  2012. 
B)  2013. 
C)  2014. 
D)  2015.

Question 7

Cactus Corporation,an S Corporation,had accumulated earnings and profits of $100,000 at the beginning of 2009.Tex and Shirley each own 50% of the stock and have a basis in their stock of $50,000 on January 1,2009.Cactus does not make any distributions during 2009,but had $200,000 of ordinary income.In 2010,ordinary income was $100,000 and distributions were $100,000.What is Tex's basis at January 1,2011?

Accepted Answer

A)  $100,000 
B)  $150,000 
C)  $200,000 
D)  $250,000 
A)  $100,000 
B)  $150,000 
C)  $200,000 
D)  $250,000

Question 8

Which of the following tax levies imposed on an S corporation are required to be paid by using estimated tax payments?

Accepted Answer

A)  built-in gains tax 
B)  excess net passive income tax 
C)  both A and B 
D)  none of the above 
A)  built-in gains tax 
B)  excess net passive income tax 
C)  both A and B 
D)  none of the above

Question 9

An S corporation is permitted to claim

Accepted Answer

A)  the dividends-received deduction. 
B)  a personal exemption. 
C)  a deduction based on the amortization of organizational expenditures. 
D)  a net operating loss. 
A)  the dividends-received deduction. 
B)  a personal exemption. 
C)  a deduction based on the amortization of organizational expenditures. 
D)  a net operating loss.

Question 10

Gofer Corporation,an S corporation,is owned equally by Mahmoud and Kwame.The corporation had long-term capital gains of $100,000 and ordinary income of $90,000 for the current year and made no distributions.What is the amount of ordinary income from S corporation activities that Mahmoud must report?

Accepted Answer

$90,000 ×

Question 11

Helmut and Sergei own all the stock of Zappo Corporation,a calendar-year domestic corporation.On January 30 of the current year,Sergei sells his entire interest in the Zappo stock to Nils.All three individuals are U.S.citizens.Can an S election be made for the current year?

Accepted Answer

A)  not for the current year but for the next year 
B)  Yes, if Helmut and Nils agree to report all of the corporation's income for the entire year 
C)  Yes, if Sergei will also join in the election with Helmut and Nils 
D)  Yes, if Helmut and Nils agree to file a short-period return and Sergei also agrees to the return 
A)  not for the current year but for the next year 
B)  Yes, if Helmut and Nils agree to report all of the corporation's income for the entire year 
C)  Yes, if Sergei will also join in the election with Helmut and Nils 
D)  Yes, if Helmut and Nils agree to file a short-period return and Sergei also agrees to the return

Question 12

Robert Elk paid $100,000 for all of the single class of stock of Elkom Corporation,an electing S corporation,when incorporated in January,2007.Elkom's operating results and dividend distribution are as follows:
   What is Elk's basis for his Elkom stock on December 31 of 2007?

Accepted Answer

$100,000 - $40,000 + ($60,000 - $20,000)

Question 13

Alligood Corporation has two classes of common stock outstanding.The Class A and Class B common stock give the shareholders identical rights and interests in the profits and assets of the corporation.Class A stock has one vote per share.Class B stock is nonvoting.Alligood Corporation may

Accepted Answer

A)  not make the S election due to different voting rights. 
B)  make the S election once the Class B is retired. 
C)  make the S election at any time. 
D)  not make the S election due to two classes of stock. 
A)  not make the S election due to different voting rights. 
B)  make the S election once the Class B is retired. 
C)  make the S election at any time. 
D)  not make the S election due to two classes of stock.

Question 14

Eagle Corporation has always been an S corporation.Eagle is 100% owned by Katy.Katy's adjusted basis in the Eagle stock is $100,000 on January 1 of the current year.During the current year,Eagle distributes XYZ stock (a capital asset)to Katy.The XYZ stock has a $50,000 FMV and a $40,000 adjusted basis on Eagle's books.The XYZ stock has been held as an investment for four years by Eagle.Eagle Corporation reports $40,000 of ordinary income in the current year.What is Katy's basis in the Eagle stock at the beginning of the next year?

Accepted Answer

The answer of Eagle Corporation has always been an S...

Question 15

Even if the termination of an S election is considered to be inadvertent,the election to terminate is irrevocable.

Accepted Answer

A) True 
 B)False

Question 16

Krause Corporation makes an S election,believing that it has no current or accumulated E&P.However,after an IRS audit,Krause is found to have failed the passive investment income test for three consecutive years and also to have a SubChapter E&P balance from its three pre-election tax years.The IRS will

Accepted Answer

A)  automatically terminate the election and Krause cannot reelect for a 5-year time period. 
B)  retroactively revoke the election to the first day on which it was effective and Krause will not be able to reelect. 
C)  treat the error as such and allow the election to continue unbroken. 
D)  likely treat the termination as inadvertent and will probably approve a continued S election if the corporation distributes the Subchapter C E&P. 
A)  automatically terminate the election and Krause cannot reelect for a 5-year time period. 
B)  retroactively revoke the election to the first day on which it was effective and Krause will not be able to reelect. 
C)  treat the error as such and allow the election to continue unbroken. 
D)  likely treat the termination as inadvertent and will probably approve a continued S election if the corporation distributes the Subchapter C E&P.

Question 17

A testamentary trust can be an S shareholder for two years,beginning on the date the stock transfers to the trust.

Accepted Answer

A) True 
 B)False

Question 18

David owns 25% of an S corporation's stock (a capital asset)for the first three months of the S corporation's tax year.During the year,the S corporation has $16,000 of ordinary income and $32,000 of long-term capital gain.David starts the year with a basis of $50,000 in his S corporation stock and sells the stock for $56,000 on April 1 of the year.Assuming all months have 30 days,how much gain/loss does David report on the sale of the stock and what is its character?

Accepted Answer

[$50,000 + ($16,000

Question 19

An S corporation reports ordinary income of $120,000 after deducting $20,000 for Fred's salary.Fred and his three children own the S corporation equally.The IRS determines Fred's stock transfer to his three children is not bona fide.Reasonable compensation for Fred is $40,000.How much of the S corporation's $140,000 pre-salary income must be reported by Fred?

Accepted Answer

A)  $140,000 
B)  $100,000 
C)  $50,000 
D)  $40,000 
A)  $140,000 
B)  $100,000 
C)  $50,000 
D)  $40,000

Question 20

Identify which of the following statements is true.

Accepted Answer

A)  An S corporation should have a buy-sell agreement to guard itself against an ill-advised sale of its stock. 
B)  The terms "small business corporation" and "S corporation" are synonymous. 
C)  A regular corporation has common and preferred stock outstanding on January 1. On January 2, the preferred stock is canceled in a recapitalization, leaving only common stock outstanding. The corporation can make an S election for this tax year. 
D)  All of the above are false. 
A)  An S corporation should have a buy-sell agreement to guard itself against an ill-advised sale of its stock. 
B)  The terms "small business corporation" and "S corporation" are synonymous. 
C)  A regular corporation has common and preferred stock outstanding on January 1. On January 2, the preferred stock is canceled in a recapitalization, leaving only common stock outstanding. The corporation can make an S election for this tax year. 
D)  All of the above are false.

For an S corporation to elect to use a fiscal year other than a permitted year,the fiscal year elected must have a maximum deferral period of

Trusts that can own S corporation stock include all of the following except

Which of the following corporate tax levies are imposed on an S corporation?

Identify which of the following statements is true.

Identify which of the following statements is false.

April Corporation's Subchapter S election was voluntarily terminated for 2010.The first year that April would be eligible to reelect S corporation status is

Which of the following tax levies imposed on an S corporation are required to be paid by using estimated tax payments?

An S corporation is permitted to claim

Gofer Corporation,an S corporation,is owned equally by Mahmoud and Kwame.The corporation had long-term capital gains of $100,000 and ordinary income of $90,000 for the current year and made no distributions.What is the amount of ordinary income from S corporation activities that Mahmoud must report?

Helmut and Sergei own all the stock of Zappo Corporation,a calendar-year domestic corporation.On January 30 of the current year,Sergei sells his entire interest in the Zappo stock to Nils.All three individuals are U.S.citizens.Can an S election be made for the current year?

Robert Elk paid $100,000 for all of the single class of stock of Elkom Corporation,an electing S corporation,when incorporated in January,2007.Elkom's operating results and dividend distribution are as follows: What is Elk's basis for his Elkom stock on December 31 of 2007?

Alligood Corporation has two classes of common stock outstanding.The Class A and Class B common stock give the shareholders identical rights and interests in the profits and assets of the corporation.Class A stock has one vote per share.Class B stock is nonvoting.Alligood Corporation may

Even if the termination of an S election is considered to be inadvertent,the election to terminate is irrevocable.

A testamentary trust can be an S shareholder for two years,beginning on the date the stock transfers to the trust.

Identify which of the following statements is true.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

Filters

Exam 11: US Corporations

For an S corporation to elect to use a fiscal year other than a permitted year,the fiscal year elected must have a maximum deferral period of

Trusts that can own S corporation stock include all of the following except

Which of the following corporate tax levies are imposed on an S corporation?

Identify which of the following statements is true.

Identify which of the following statements is false.

April Corporation's Subchapter S election was voluntarily terminated for 2010.The first year that April would be eligible to reelect S corporation status is

Which of the following tax levies imposed on an S corporation are required to be paid by using estimated tax payments?

An S corporation is permitted to claim

Helmut and Sergei own all the stock of Zappo Corporation,a calendar-year domestic corporation.On January 30 of the current year,Sergei sells his entire interest in the Zappo stock to Nils.All three individuals are U.S.citizens.Can an S election be made for the current year?

Robert Elk paid $100,000 for all of the single class of stock of Elkom Corporation,an electing S corporation,when incorporated in January,2007.Elkom's operating results and dividend distribution are as follows: What is Elk's basis for his Elkom stock on December 31 of 2007?

Alligood Corporation has two classes of common stock outstanding.The Class A and Class B common stock give the shareholders identical rights and interests in the profits and assets of the corporation.Class A stock has one vote per share.Class B stock is nonvoting.Alligood Corporation may

Even if the termination of an S election is considered to be inadvertent,the election to terminate is irrevocable.

A testamentary trust can be an S shareholder for two years,beginning on the date the stock transfers to the trust.

Identify which of the following statements is true.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

Filters