Question 1

_________________________ may not make the AAA negative or increase a negative balance.

Accepted Answer

The answer of _________________________ may not make the AAA negative...

Question 2

Which,if any,of the following can be eligible shareholders of an S corporation?

Accepted Answer

A) A resident alien. 
B) Partnership. 
C) A foreign corporation. 
D) A nonqualifying trust. 
E) None of the above can own stock. 
A) A resident alien. 
B) Partnership. 
C) A foreign corporation. 
D) A nonqualifying trust. 
E) None of the above can own stock.

Question 3

An S corporation with earnings and profits can make a taxable dividend distribution by making a AAA bypass election.

Accepted Answer

A) True 
 B)False

Question 4

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

Accepted Answer

A) Payroll penalty. 
B) Unreasonable compensation. 
C) Life insurance proceeds (nontaxable to the recipient S corporation). 
D) Taxable interest. 
E) None of the above affects the OAA. 
A) Payroll penalty. 
B) Unreasonable compensation. 
C) Life insurance proceeds (nontaxable to the recipient S corporation). 
D) Taxable interest. 
E) None of the above affects the OAA.

Question 5

Only 51% of the shareholders must consent to an S election.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

On December 31,2007,Erica Sumners owns one share of an S corporation's 10 outstanding shares of stock.The basis of Erica's share is $300.During 2008,the S corporation has no income or deductions,but incurs a loss of $3,650.Using the separate-share approach,determine the amount of the loss allocated to Erica and calculate her stock basis in 2008.

Accepted Answer

Under the separate-share approach,the am

Question 8

Stock basis is first increased by income items,then decreased by losses,and then decreased by distributions.

Accepted Answer

A) True 
 B)False

Question 9

During 2008,an S corporation in Gainesville,Florida,incurs the following transactions.
 
The corporation's passive investment income for 2008 is:

Accepted Answer

A) $3,000. 
B) $11,000. 
C) $8,000. 
D) $19,000. 
E) None of the above. 
A) $3,000. 
B) $11,000. 
C) $8,000. 
D) $19,000. 
E) None of the above.

Question 10

Match the term with the proper response. There may be more than one responses for each term.
a.Includes gross receipts derived from royalties, passive rents, dividends, interest, etc.
b.Penalty tax to stop an S corporation from avoiding the corporate tax on disposition of appreciated property.
c.Cumulative total of undistributed non-separately stated items.
d.Tax-free distribution.
e.Generated under old S corporation rules (pre-1983).
f.Items that affect basis but not AAA go here.
g.Taxed as a dividend.
-OAA

Accepted Answer

The answer of Match the term with the proper response....

Question 11

Sloane is a shareholder in a calendar year S corporation.At the beginning of the year,her stock basis is $10,000,her share of AAA is $2,000,and her share of corporate AEP is $5,000.She receives a $6,000 distribution,and her share of S corporation items includes a $2,000 long-term capital gain and a $9,000 ordinary loss.Determine the effects of these events on AAA,stock basis,and AEP.

Accepted Answer

The answer of Sloane is a shareholder in a calendar...

Question 12

An S corporation may not amortize organization expenses.

Accepted Answer

A) True 
 B)False

Question 13

Tax-exempt income at the corporate level does flow through to the shareholders.

Accepted Answer

A) True 
 B)False

Question 14

S corporations are treated as partnerships under state laws.

Accepted Answer

A) True 
 B)False

Question 15

S corporation losses are allocated on a ____________________ basis.

Accepted Answer

The answer of S corporation losses are allocated on a...

Question 16

If the beginning balance in OAA is zero,and the following transactions occur,what is the ending OAA balance?

Accepted Answer

A) $1,300. 
B) $6,600. 
C) $23,300. 
D) $27,500. 
E) None of the above. 
A) $1,300. 
B) $6,600. 
C) $23,300. 
D) $27,500. 
E) None of the above.

Question 17

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

Accepted Answer

The answer of With respect to passive losses,there are three...

Question 18

Which statement is incorrect with respect to filing for an S election?

Accepted Answer

A) Form 2553 must be filed. 
B) All shareholders must consent. 
C) The election may be filed in the previous year. 
D) An extension of time is available for filing Form 2553. 
E) None of the above are incorrect. 
A) Form 2553 must be filed. 
B) All shareholders must consent. 
C) The election may be filed in the previous year. 
D) An extension of time is available for filing Form 2553. 
E) None of the above are incorrect.

Question 19

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

Accepted Answer

A) Charitable contributions. 
B) Unreasonable compensation. 
C) Payroll tax penalty assessed. 
D) Section 1245 income. 
E) None of the above. 
A) Charitable contributions. 
B) Unreasonable compensation. 
C) Payroll tax penalty assessed. 
D) Section 1245 income. 
E) None of the above.

Question 20

Which statement is incorrect?

Accepted Answer

A) S corporations are treated as corporations under state law. 
B) S corporations for tax purposes are treated as partnerships. 
C) Distributions of appreciated property are taxable to the S corporation. 
D) The accumulated earnings tax does not apply to an S corporation. 
E) None of the above. 
A) S corporations are treated as corporations under state law. 
B) S corporations for tax purposes are treated as partnerships. 
C) Distributions of appreciated property are taxable to the S corporation. 
D) The accumulated earnings tax does not apply to an S corporation. 
E) None of the above.

_________________________ may not make the AAA negative or increase a negative balance.

Which,if any,of the following can be eligible shareholders of an S corporation?

An S corporation with earnings and profits can make a taxable dividend distribution by making a AAA bypass election.

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

Only 51% of the shareholders must consent to an S election.

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

Stock basis is first increased by income items,then decreased by losses,and then decreased by distributions.

During 2008,an S corporation in Gainesville,Florida,incurs the following transactions. The corporation's passive investment income for 2008 is:

An S corporation may not amortize organization expenses.

Tax-exempt income at the corporate level does flow through to the shareholders.

S corporations are treated as partnerships under state laws.

S corporation losses are allocated on a ____________________ basis.

If the beginning balance in OAA is zero,and the following transactions occur,what is the ending OAA balance?

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

Which statement is incorrect with respect to filing for an S election?

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

Which statement is incorrect?

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, operation, and Basis

Partnerships: Distributions, transfer of Interests, and Terminations

Comparative Forms of Doing Business

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 12: S Corporations

_________________________ may not make the AAA negative or increase a negative balance.

Which,if any,of the following can be eligible shareholders of an S corporation?

An S corporation with earnings and profits can make a taxable dividend distribution by making a AAA bypass election.

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

Only 51% of the shareholders must consent to an S election.

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

Stock basis is first increased by income items,then decreased by losses,and then decreased by distributions.

During 2008,an S corporation in Gainesville,Florida,incurs the following transactions. The corporation's passive investment income for 2008 is:

An S corporation may not amortize organization expenses.

Tax-exempt income at the corporate level does flow through to the shareholders.

S corporations are treated as partnerships under state laws.

S corporation losses are allocated on a ____________________ basis.

If the beginning balance in OAA is zero,and the following transactions occur,what is the ending OAA balance?

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

Which statement is incorrect with respect to filing for an S election?

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

Which statement is incorrect?

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, operation, and Basis

Partnerships: Distributions, transfer of Interests, and Terminations

Comparative Forms of Doing Business

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

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.