Question 1

Advise your client how income, expenses, gain, and losses are allocated to shareholders of an S corporation.

Accepted Answer

In general, S corporation items are divi

Question 2

An S corporation with substantial AEP has operating revenues of $410,000, taxable interest income of $390,000, operating expenses of $260,000, and deductions attributable to the interest of $150,000.The passive income penalty tax payable, if any, is:

Accepted Answer

A) $0. 
B) $40,923. 
C) $116,923. 
D) $136,500. 
A) $0. 
B) $40,923. 
C) $116,923. 
D) $136,500.

Question 3

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.

Accepted Answer

A) True 
 B)False

Question 4

You are given the following facts about a one-shareholder S corporation. Prepare the shareholder's ending stock basis.

Accepted Answer

A) $168,660. 
B) $192,850. 
C) $214,960. 
D) $263,960. 
A) $168,660. 
B) $192,850. 
C) $214,960. 
D) $263,960.

Question 5

Tax-exempt income is listed on Schedule ____________________ of Form 1120S.

Accepted Answer

The answer of Tax-exempt income is listed on Schedule ____________________...

Question 6

The Schedule M-3 is the same for a C corporation and an S corporation.

Accepted Answer

A) True 
 B)False

Question 7

Which equity arrangement cannot be used by an S corporation?

Accepted Answer

A) Phantom stock. 
B) Stock appreciation rights. 
C) Warrants. 
D) Straight debt. 
E) An insurance company structure. 
A) Phantom stock. 
B) Stock appreciation rights. 
C) Warrants. 
D) Straight debt. 
E) An insurance company structure.

Question 8

In the case of a complete termination of an S corporation interest, a ____________________ tax year may occur.

Accepted Answer

The answer of In the case of a complete termination...

Question 9

Yates Corporation elects S status, effective for calendar year 2012.Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1, 2012.The asset is sold at the end of 2012 for $130,800.What amount must Mark Farris, a 60% owner and subject to a 15% income tax rate, pay, if any?

Accepted Answer

A) $5,358. 
B) $12,642. 
C) $21,070. 
D) $35,718. 
A) $5,358. 
B) $12,642. 
C) $21,070. 
D) $35,718.

Question 10

An S corporation can be a shareholder in another corporation.

Accepted Answer

A) True 
 B)False

Question 11

The carryover period for the NOLs of a C corporation continues to run during S corporation years.

Accepted Answer

A) True 
 B)False

Question 12

An S corporation can take advantage of the dividends received deduction.

Accepted Answer

A) True 
 B)False

Question 13

The maximum number of shareholders in an S corporation is:

Accepted Answer

A) 75. 
B) 100. 
C) 200. 
D) Indeterminable. 
A) 75. 
B) 100. 
C) 200. 
D) Indeterminable.

Question 14

Towne, Inc., a calendar year S corporation, has an AAA amount of $627,050 at the beginning of 2012. During the year, the following items occur.
   Calculate Towne's ending AAA balance.

Accepted Answer

The answer of Towne, Inc., a calendar year S corporation,...

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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) Domestic production activities deduction. 
E) None of the above. 
A) Charitable contributions. 
B) Unreasonable compensation. 
C) Payroll tax penalty assessed. 
D) Domestic production activities deduction. 
E) None of the above.

Question 17

An S corporation may not have a ____________________ alien shareholder.

Accepted Answer

The answer of An S corporation may not have a...

Question 18

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

Accepted Answer

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

Question 19

Compare the distribution of property rules for an S corporation with the corresponding partnership rules.

Accepted Answer

The major difference involves distributi

Question 20

S corporation status allows shareholders to realize tax benefits from corporate losses ____________________.

Accepted Answer

The answer of S corporation status allows shareholders to realize...

Exam 22: S: Corporations

Advise your client how income, expenses, gain, and losses are allocated to shareholders of an S corporation.

An S corporation with substantial AEP has operating revenues of $410,000, taxable interest income of $390,000, operating expenses of $260,000, and deductions attributable to the interest of $150,000.The passive income penalty tax payable, if any, is:

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.

You are given the following facts about a one-shareholder S corporation. Prepare the shareholder's ending stock basis.

Tax-exempt income is listed on Schedule ____________________ of Form 1120S.

The Schedule M-3 is the same for a C corporation and an S corporation.

Which equity arrangement cannot be used by an S corporation?

In the case of a complete termination of an S corporation interest, a ____________________ tax year may occur.

An S corporation can be a shareholder in another corporation.

The carryover period for the NOLs of a C corporation continues to run during S corporation years.

An S corporation can take advantage of the dividends received deduction.

The maximum number of shareholders in an S corporation is:

Towne, Inc., a calendar year S corporation, has an AAA amount of $627,050 at the beginning of 2012. During the year, the following items occur. Calculate Towne's ending AAA balance.

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

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

An S corporation may not have a ____________________ alien shareholder.

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

Compare the distribution of property rules for an S corporation with the corresponding partnership rules.

S corporation status allows shareholders to realize tax benefits from corporate losses ____________________.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters