Question 1

Identify which of the following statements is false.

Accepted Answer

A) The AAA balance can be negative,but the shareholder's basis in the S corporation stock cannot be less than zero. 
B) The AAA represents the cumulative income/loss recognized in post-1982 S corporation years. 
C) Nonmoney property distributions made by an S corporation having accumulated E&P are treated differently when determining the corporate-level gain recognized under Sec.311 than are property distributions made by an S corporation without accumulated E&P. 
D) Tax-exempt income does not increase the AAA but increases the basis of the S corporation stock. 
A) The AAA balance can be negative,but the shareholder's basis in the S corporation stock cannot be less than zero. 
B) The AAA represents the cumulative income/loss recognized in post-1982 S corporation years. 
C) Nonmoney property distributions made by an S corporation having accumulated E&P are treated differently when determining the corporate-level gain recognized under Sec.311 than are property distributions made by an S corporation without accumulated E&P. 
D) Tax-exempt income does not increase the AAA but increases the basis of the S corporation stock. C

Question 2

Garret and Hans own all the stock of GH Corporation.Garret sells all his GH stock to Olga on February 12.The next day,GH makes an S election.For the election to apply to the current year,who must consent to the election?

Accepted Answer

Olga,Garret,and Hans must consent to the election.If Olga refuses to consent to the election,the election will not begin until next year.

Question 3

Corporations and partnerships can be S corporation shareholders.

Accepted Answer

A) True 
 B)False  False

Question 4

Identify which of the following statements is false.

Accepted Answer

A) The election form can be signed by a person authorized to sign the S corporation tax return. 
B) An S election is filed by the corporation by using Form 2553 on or before the due date (without regard to any extensions)for the corporate tax return for the tax year in question. 
C) An S corporation must file a tax return for any year in which the S corporation is in existence. 
D) The IRS can grant extensions of time of filing shareholder consents to the S election. 
A) The election form can be signed by a person authorized to sign the S corporation tax return. 
B) An S election is filed by the corporation by using Form 2553 on or before the due date (without regard to any extensions)for the corporate tax return for the tax year in question. 
C) An S corporation must file a tax return for any year in which the S corporation is in existence. 
D) The IRS can grant extensions of time of filing shareholder consents to the S election.

Question 5

Identify which of the following statements is false.

Accepted Answer

A) An S corporation files a Form 1120S corporate income tax return on or before the 15th day of the fourth month following the close of its tax year. 
B) An S corporation's ordinary income or loss is reported by an individual shareholder on Schedule E of Form 1040. 
C) An S corporation that owes the built-in gains tax or the excess net passive income tax must make quarterly estimated tax payments. 
D) An S corporation cannot use the prior-year tax liability exception when determining the required payment to be made with respect to the built-in gains tax. 
A) An S corporation files a Form 1120S corporate income tax return on or before the 15th day of the fourth month following the close of its tax year. 
B) An S corporation's ordinary income or loss is reported by an individual shareholder on Schedule E of Form 1040. 
C) An S corporation that owes the built-in gains tax or the excess net passive income tax must make quarterly estimated tax payments. 
D) An S corporation cannot use the prior-year tax liability exception when determining the required payment to be made with respect to the built-in gains tax.

Question 6

Identify which of the following statements is true.

Accepted Answer

A) An S corporation may be subject to the corporate alternative minimum tax. 
B) Allocation of tax preference items for AMT generally occurs on a daily basis. 
C) An S corporation may be subject to the corporate alternative minimum tax when the corporation has accumulated E&P from prior C corporation tax years. 
D) All of the above are false. 
A) An S corporation may be subject to the corporate alternative minimum tax. 
B) Allocation of tax preference items for AMT generally occurs on a daily basis. 
C) An S corporation may be subject to the corporate alternative minimum tax when the corporation has accumulated E&P from prior C corporation tax years. 
D) All of the above are false.

Question 7

Identify which of the following statements is true.

Accepted Answer

A) An election for an S corporation to use the Sec.179 expensing election is made by the corporation and not by its shareholders. 
B) The S corporation's separately stated items are in general the same ones that apply in partnership taxation. 
C) An S corporation cannot claim a dividends-received deduction. 
D) All of the above are true. 
A) An election for an S corporation to use the Sec.179 expensing election is made by the corporation and not by its shareholders. 
B) The S corporation's separately stated items are in general the same ones that apply in partnership taxation. 
C) An S corporation cannot claim a dividends-received deduction. 
D) All of the above are true.

Question 8

Identify which of the following statements is true.

Accepted Answer

A) The S corporation rules were enacted to allow small corporations to enjoy the nontax advantages of the corporate form of business without being subject to the tax disadvantage of double taxation. 
B) A partnership can elect to be taxed as a corporation under the check-the-box regulations.As a corporation,an S election can be made. 
C) For C corporations that desire to be taxed like a partnership,the S corporation rules provide a practical alternative for an existing C corporation to obtain many of the tax benefits of being taxed as a partnership. 
D) All of the above are true. 
A) The S corporation rules were enacted to allow small corporations to enjoy the nontax advantages of the corporate form of business without being subject to the tax disadvantage of double taxation. 
B) A partnership can elect to be taxed as a corporation under the check-the-box regulations.As a corporation,an S election can be made. 
C) For C corporations that desire to be taxed like a partnership,the S corporation rules provide a practical alternative for an existing C corporation to obtain many of the tax benefits of being taxed as a partnership. 
D) All of the above are true.

Question 9

Martha,a U.S.citizen,owns 40% of the stock of George Corporation,an electing S corporation.At the time of her death this year,the George stock passes to her estate.The stock is subsequently transferred to a trust provided for in Martha's will.Can the testamentary trust hold the George stock for a two-year period before the S election is terminated?

Accepted Answer

The trust can hold the S corporation sto

Question 10

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 11

Dixon Corporation was incorporated on January 1,2005.The corporation made its S election on April 1,2008.The corporation retains an E&P balance from its C corporation days.Which one of the following current-year income and expense items is not included in Dixon Corporation's Accumulated Adjustments Account?

Accepted Answer

A) ordinary income or loss 
B) tax-exempt bond interest income 
C) long-term capital gains and losses 
D) amortization of organizational expenditures 
A) ordinary income or loss 
B) tax-exempt bond interest income 
C) long-term capital gains and losses 
D) amortization of organizational expenditures

Question 12

Identify which of the following statements is true.

Accepted Answer

A) All of the shareholders of an S corporation must consent to a revocation of the S election. 
B) A revocation of an S corporation election can be retrospective to any date. 
C) An S election will not be terminated due to excess passive income if the corporation does not have Subchapter C E&P. 
D) All of the above are true. 
A) All of the shareholders of an S corporation must consent to a revocation of the S election. 
B) A revocation of an S corporation election can be retrospective to any date. 
C) An S election will not be terminated due to excess passive income if the corporation does not have Subchapter C E&P. 
D) All of the above are true.

Question 13

Identify which of the following statements is true.

Accepted Answer

A) Fringe benefits limited by the more-than-2%-shareholder rule include stock options,group term life insurance premiums,and medical insurance premiums. 
B) A shareholder owning 2% or more of an S corporation's stock,who is also an employee of the corporation,must include all statutory fringe benefits in gross income on his/her individual return. 
C) Section 318 stock attribution rules are used to define 2% or more shareholders of S corporation's stock. 
D) All of the above are false. 
A) Fringe benefits limited by the more-than-2%-shareholder rule include stock options,group term life insurance premiums,and medical insurance premiums. 
B) A shareholder owning 2% or more of an S corporation's stock,who is also an employee of the corporation,must include all statutory fringe benefits in gross income on his/her individual return. 
C) Section 318 stock attribution rules are used to define 2% or more shareholders of S corporation's stock. 
D) All of the above are false.

Question 14

The recognition period for the built-in gains tax extends for how many years after the S election takes effect?

Accepted Answer

A) one year 
B) three years 
C) five years 
D) ten years 
A) one year 
B) three years 
C) five years 
D) ten years

Question 15

All shareholders must consent to the revocation of S status.

Accepted Answer

A) True 
 B)False

Question 16

King Corporation,an electing S corporation,is 100% owned by Crystal.On January 1 of the current year,her adjusted basis in the King stock is $30,000.During the year,King reports an ordinary loss of $30,000,tax-exempt municipal bond income of $15,000,dividend income from domestic corporations of $5,000,a long-term capital loss of $20,000,and a short-term capital loss of $30,000.What is Crystal's basis for the King stock at the end of the year?

Accepted Answer

@#IMG-DLM& Only $50,000 of the $80,000 t

Question 17

Zebra Corporation has always been an S corporation and is 100% owned by Paul.Paul has a basis of $40,000 in his Zebra stock at the beginning of the year.During the year,Zebra has an ordinary loss of $20,000 and a long-term capital gain of $10,000.In addition,Zebra Corporation distributed $55,000 in cash to Paul on December 1.Will the distribution cause Paul to recognize a gain? If so,what are its amount and character?

Accepted Answer

Basis adjustments for distributions made

Question 18

Which of the following would terminate a Subchapter S election?

Accepted Answer

A) Estate becomes a shareholder. 
B) Grantor trust becomes a shareholder. 
C) Voting trust becomes a shareholder. 
D) Partnership becomes a shareholder. 
A) Estate becomes a shareholder. 
B) Grantor trust becomes a shareholder. 
C) Voting trust becomes a shareholder. 
D) Partnership becomes a shareholder.

Question 19

Cactus Corporation,an S Corporation,had accumulated earnings and profits of $100,000 at the beginning of 2011.Tex and Shirley each own 50% of the stock.Cactus does not make any distributions during 2011,but had $200,000 of ordinary income.In 2012,ordinary income was $100,000 and distributions were $100,000.What is Tex's ordinary income for 2012?

Accepted Answer

A) $0 
B) $50,000 
C) $100,000 
D) $200,000 
A) $0 
B) $50,000 
C) $100,000 
D) $200,000

Question 20

Identify which of the following statements is false.

Accepted Answer

A) Randy is a shareholder in an S corporation.His stock basis is $10,000 and his basis in a loan he made to the corporation is $3,000.Randy's share of the corporation's ordinary loss for the current year is $11,000.Ignoring the at-risk and passive activity limitations,Randy can deduct the loss in full. 
B) A shareholder's S corporation stock basis will increase when the shareholder acts as guarantor on a corporate indebtedness. 
C) A shareholder's ratable share of the S corporation's ordinary loss reduces the adjusted basis of his/her S corporation stock.Once the basis of the stock is reduced to zero,any loss-passthrough that remains reduces the basis of S corporation debts that are owed to the shareholder. 
D) Debt basis is restored before stock basis. 
A) Randy is a shareholder in an S corporation.His stock basis is $10,000 and his basis in a loan he made to the corporation is $3,000.Randy's share of the corporation's ordinary loss for the current year is $11,000.Ignoring the at-risk and passive activity limitations,Randy can deduct the loss in full. 
B) A shareholder's S corporation stock basis will increase when the shareholder acts as guarantor on a corporate indebtedness. 
C) A shareholder's ratable share of the S corporation's ordinary loss reduces the adjusted basis of his/her S corporation stock.Once the basis of the stock is reduced to zero,any loss-passthrough that remains reduces the basis of S corporation debts that are owed to the shareholder. 
D) Debt basis is restored before stock basis.

Identify which of the following statements is false.

Garret and Hans own all the stock of GH Corporation.Garret sells all his GH stock to Olga on February 12.The next day,GH makes an S election.For the election to apply to the current year,who must consent to the election?

Corporations and partnerships can be S corporation shareholders.

Identify which of the following statements is false.

Identify which of the following statements is false.

Identify which of the following statements is true.

Identify which of the following statements is true.

Identify which of the following statements is true.

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

Identify which of the following statements is true.

Identify which of the following statements is true.

The recognition period for the built-in gains tax extends for how many years after the S election takes effect?

All shareholders must consent to the revocation of S status.

Which of the following would terminate a Subchapter S election?

Identify which of the following statements is false.

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

Identify which of the following statements is false.

Garret and Hans own all the stock of GH Corporation.Garret sells all his GH stock to Olga on February 12.The next day,GH makes an S election.For the election to apply to the current year,who must consent to the election?

Corporations and partnerships can be S corporation shareholders.

Identify which of the following statements is false.

Identify which of the following statements is false.

Identify which of the following statements is true.

Identify which of the following statements is true.

Identify which of the following statements is true.

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

Identify which of the following statements is true.

Identify which of the following statements is true.

The recognition period for the built-in gains tax extends for how many years after the S election takes effect?

All shareholders must consent to the revocation of S status.

Which of the following would terminate a Subchapter S election?

Identify which of the following statements is false.

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