Question 1

Distribution of _________________ property should be avoided.

Accepted Answer

The answer of Distribution of _________________ property should be avoided....

Question 2

Identify a disadvantage of an S corporation.

Accepted Answer

A) Generally, trusts cannot be shareholders. 
B) Losses flow through to the shareholders. 
C) The AMT on corporations is avoided. 
D) Tax-exempt income flows through to the shareholders. 
E) None of the above is a disadvantage of the S election. 
A) Generally, trusts cannot be shareholders. 
B) Losses flow through to the shareholders. 
C) The AMT on corporations is avoided. 
D) Tax-exempt income flows through to the shareholders. 
E) None of the above is a disadvantage of the S election.

Question 3

Outline the requirements that an entity must meet to elect S corporation status.

Accepted Answer

If each of the following requirements is

Question 4

On January 2,2007,David loans his S corporation $10,000.By the end of 2007,David's stock basis is zero,and the basis in his note has been reduced to $8,000.During 2008,the company's operating income is $10,000.The company also makes distributions to David of $8,000.Which statement is correct?

Accepted Answer

A) Loan basis is now $10,000. 
B) $8,000 LTCG. 
C) Stock basis is $2,000. 
D) $2,000 LTCG. 
E) None of the above statements is correct. 
A) Loan basis is now $10,000. 
B) $8,000 LTCG. 
C) Stock basis is $2,000. 
D) $2,000 LTCG. 
E) None of the above statements is correct.

Question 5

The taxable LIFO recapture amount equals the excess of the inventory's value under __________ over the __________ value.

Accepted Answer

The answer of The taxable LIFO recapture amount equals the...

Question 6

An S corporation does not recognize gain on a distribution of appreciated property.

Accepted Answer

A) True 
 B)False

Question 7

Stock basis is first increased by income items,then ___________ by distributions,and finally decreased by __________.

Accepted Answer

The answer of Stock basis is first increased by income...

Question 8

Tanvir has been the sole shareholder of a calendar year S corporation since 1979.At the end of 2008,Tanvir's stock basis is $15,500,and he receives a distribution of $17,000.Corporate level accounts are computed as follows.
   
Calculate Tanvir's capital gain,if any.

Accepted Answer

The answer of Tanvir has been the sole shareholder of...

Question 9

On January 1,Bobby and Alice own equally all of the stock of an electing S corporation called Prairie Dirt Delight.The dirt company has a $60,000 loss for a non-leap year.On the 219th day of the year,Bobby sells his one-half of the stock to his son,Paul.How much of the $60,000 loss,if any,is allocated to Bobby?

Accepted Answer

A) $0. 
B) $18,000. 
C) $36,000. 
D) $60,000. 
E) None of the above. 
A) $0. 
B) $18,000. 
C) $36,000. 
D) $60,000. 
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.
-Passive investment income tax

Accepted Answer

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

Question 11

More S corporation returns are filed than C corporation returns.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

____________________ husband and wife must consent if they own their stock jointly.

Accepted Answer

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

Question 14

Randall owns 800 shares in Fabrication,Inc.,an S corporation in Moss Hill,Texas.In 2008,his basis in his stock is $30,000,before the adjustment for this year's losses.During 2008,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) None. 
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. 
E) Some other amounts. 
A) None. 
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. 
E) Some other amounts.

Question 15

Gene Grams is a 45% owner of a calendar year S corporation during 2008.His beginning stock basis is $230,000,and the S corporation reports the following items.
   
Calculate Grams' stock basis at year-end.

Accepted Answer

The answer of Gene Grams is a 45% owner of...

Question 16

At the end of 2008,Newt,an S corporation,has gross receipts of $190,000 and gross income of $170,000.Newt has AEP of $22,000 and taxable income of $30,000.There is passive investment income of $100,000,with $40,000 of expenses directly related to the production of passive investment income.Newt's PII (§ 1375)penalty tax is:

Accepted Answer

A) $0. 
B) $10,500. 
C) $11,025. 
D) $31,500. 
E) None of the above. 
A) $0. 
B) $10,500. 
C) $11,025. 
D) $31,500. 
E) None of the above.

Question 17

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 to realize tax benefits from corporate losses immediately. 
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. 
A) There are now more LLCs than S corporations. 
B) S corporation status allows shareholders to realize tax benefits from corporate losses immediately. 
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.

Question 18

Crew Corporation elects S status effective for tax year 2008. As of January 1,2008,Crew's assets were appraised as follows.
   
In each of the following situations,calculate any built-in gains tax,assuming that the highest corporate tax rate is 35%. C corporation taxable income would have been $100,000. 
a.During 2008, Crew collects $40,000 of the accounts receivable and sells 80% of the inventory for $99,000.
b.In 2009, Crew sells the land held for investment for $203,000.
c.In 2010, the building is sold for $270,000.

Accepted Answer

The answer of Crew Corporation elects S status effective for...

Question 19

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

Accepted Answer

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

Question 20

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

Accepted Answer

A) True 
 B)False

Distribution of _________________ property should be avoided.

Identify a disadvantage of an S corporation.

Outline the requirements that an entity must meet to elect S corporation status.

On January 2,2007,David loans his S corporation $10,000.By the end of 2007,David's stock basis is zero,and the basis in his note has been reduced to $8,000.During 2008,the company's operating income is $10,000.The company also makes distributions to David of $8,000.Which statement is correct?

The taxable LIFO recapture amount equals the excess of the inventory's value under over the value.

An S corporation does not recognize gain on a distribution of appreciated property.

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

Tanvir has been the sole shareholder of a calendar year S corporation since 1979.At the end of 2008,Tanvir's stock basis is $15,500,and he receives a distribution of $17,000.Corporate level accounts are computed as follows. Calculate Tanvir's capital gain,if any.

More S corporation returns are filed than C corporation returns.

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

____________________ husband and wife must consent if they own their stock jointly.

Gene Grams is a 45% owner of a calendar year S corporation during 2008.His beginning stock basis is $230,000,and the S corporation reports the following items. Calculate Grams' stock basis at year-end.

What statement is correct with respect to an S corporation?

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

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

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

Distribution of _________________ property should be avoided.

Identify a disadvantage of an S corporation.

Outline the requirements that an entity must meet to elect S corporation status.

On January 2,2007,David loans his S corporation $10,000.By the end of 2007,David's stock basis is zero,and the basis in his note has been reduced to $8,000.During 2008,the company's operating income is $10,000.The company also makes distributions to David of $8,000.Which statement is correct?

The taxable LIFO recapture amount equals the excess of the inventory's value under __________ over the __________ value.

An S corporation does not recognize gain on a distribution of appreciated property.

Stock basis is first increased by income items,then ___________ by distributions,and finally decreased by __________.

Tanvir has been the sole shareholder of a calendar year S corporation since 1979.At the end of 2008,Tanvir's stock basis is $15,500,and he receives a distribution of $17,000.Corporate level accounts are computed as follows. Calculate Tanvir's capital gain,if any.

More S corporation returns are filed than C corporation returns.

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

____________________ husband and wife must consent if they own their stock jointly.

Gene Grams is a 45% owner of a calendar year S corporation during 2008.His beginning stock basis is $230,000,and the S corporation reports the following items. Calculate Grams' stock basis at year-end.

What statement is correct with respect to an S corporation?

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

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

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

The taxable LIFO recapture amount equals the excess of the inventory's value under over the value.

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