Exam 17: Partnerships and S Corporations

The AAA Partnership makes an election to be an Electing Large Partnership.The partnership reports the following activities: What are the amounts reported by AAA to the partners on Schedule K-1 for inclusion on their individual tax returns?

Voluntary revocation of an S corporation election is permitted only if consent is obtained from all shareholders.

S corporation shareholders who own more than 2% of the outstanding stock are eligible for which of the following tax-free benefits?

All of the following would reduce the basis of a shareholder's stock in an S corporation,except

Stephanie owns a 25% interest in a qualifying S corporation.Stephanie's basis in the stock was $40,000 at the beginning of the year.Stephanie made no capital contributions and received no distributions during the year.Stephanie loaned the S corporation $10,000 this year.The S corporation incurred a $240,000 ordinary loss this year.Stephanie's deduction and carryover of the unused loss are

As a corporation,the S corporation can elect a fiscal year of its choosing.

The primary purpose of a partnership tax return is to determine the income,deduction,loss and credit items of the partnership and thus the amounts that should be reported by the individual partners.

A business distributes land to one of its owners.The business purchased the land a few years ago for $15,000,but it is now worth $35,000.Compare the treatment of this distribution when made by a partnership as opposed to an S corporation.Consider the impact on the business and the partner/shareholder and the determination of basis in the property.

An S corporation may not have more than 75 shareholders.

To receive S corporation treatment,a qualifying shareholder must be an individual,partnership,estate,qualifying trust,or certain kinds of tax-exempt organizations.

Under the "check-the-box" Treasury Regulations,an LLC with more than one member is treated as a partnership unless the LLC affirmatively elects to be classified as a corporation.

What are special allocations of partnership items and when are they permitted?

An S corporation can have both voting and nonvoting common stock as long as the shares of stock have identical rights to share in the profits and assets of the corporation.

In the syndication of a partnership,brokerage and registration fees,printing fees,and legal fees of the underwriter total $50,000.With respect to these fees,the partnership must

Bryan Corporation,an S corporation since its organization,is owned entirely by Mr.Bryan.The corporation uses a calendar year as its taxable year.Mr.Bryan paid $120,000 for his Bryan stock when the corporation was formed on January 1 of this year.For this year,Bryan Corporation reported the following results: Distributions of $40,000 were made during the year.What is the basis of Mr.Bryan's stock on December 31?

A contribution of services to a partnership will result in recognition of compensation to the contributing partner equal to the fair market value of the services as well as an increase in partnership basis to the extent of the income recognized.

The basis of a partnership interest is equal to the sum of money contributed plus the FMV of the property transferred to the partnership.

Chen contributes a building worth $160,000 (adjusted basis $180,000) and $40,000 in services to a partnership for a partnership interest.Chen's basis in the partnership interest is

Payton and Eli form the EP Partnership to provide marketing services.They will be equal partners.Payton is contributing property with a fair market value of $350,000 and a basis of $300,000.Eli is contributing property with a fair market value of $200,000 and a $175,000 basis.He will also provide services to the partnership valued at $150,000.Discuss the issues raised by this arrangement and the likely tax treatment of these issues.

When an S corporation shareholder sells her stock,she must first recognize ordinary gain to the extent of her share of the unrealized receivables and appreciation on inventory held by the S corporation,with the balance of the gain treated as capital gain.