Question 1

What method is used to allocate S corporation income or losses (unless an election to the contrary is made)?

Accepted Answer

A) Any method agreed to by all of the shareholders. 
B) Per-day allocation. 
C) FIFO method. 
D) LIFO method. 
A) Any method agreed to by all of the shareholders. 
B) Per-day allocation. 
C) FIFO method. 
D) LIFO method.

Question 2

During 2012, Oxen Corporation incurs the following transactions.   Oxen maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder, Megan.As a result, Megan must recognize:

Accepted Answer

A) Ordinary income of $103,000. 
B) Ordinary income of $103,000 and long-term capital gain of $5,000. 
C) Ordinary income of $103,000, long-term capital gain of $10,000, and $4,000 short-term capital loss. 
D) Ordinary income of $109,000. 
A) Ordinary income of $103,000. 
B) Ordinary income of $103,000 and long-term capital gain of $5,000. 
C) Ordinary income of $103,000, long-term capital gain of $10,000, and $4,000 short-term capital loss. 
D) Ordinary income of $109,000.

Question 3

The amount of any distribution to an S corporation shareholder is equal to the ____________________ plus the fair market value of any other property distributed..

Accepted Answer

The answer of The amount of any distribution to an...

Question 4

Grams, Inc., a calendar year S corporation, reports $20,000 DPGR and $15,000 of wages, and the S corporation's QPAI is $5,000.Janet has a 40% interest in the S corporation.All expenses that reduce DPGR are from wages, and all wages paid relate to DPGR.How much QPAI and wages are allocated to Janet?

Accepted Answer

A) None. 
B) $2,000 and $6,000. 
C) $5,000 and $15,000. 
D) $5,000 and $20,000. 
A) None. 
B) $2,000 and $6,000. 
C) $5,000 and $15,000. 
D) $5,000 and $20,000.

Question 5

An S corporation reports a recognized built-in gain of $110,000 and taxable income of $98,000.The company has an $8,000 NOL carryforward from a C corporation year, and a $7,000 business credit carryforward from a C corporation year.The built-in gains tax liability is:

Accepted Answer

A) $31,500. 
B) $28,700. 
C) $24,500. 
D) $0. 
A) $31,500. 
B) $28,700. 
C) $24,500. 
D) $0.

Question 6

Which statement is incorrect?

Accepted Answer

A) S corporations are treated as corporations under state law. 
B) S corporations resemble partnerships under the Federal income tax law. 
C) The alternative minimum tax applies to some S corporations. 
D) An S corporation may not allocate income and deduction items to specific shareholders like a partnership can. 
A) S corporations are treated as corporations under state law. 
B) S corporations resemble partnerships under the Federal income tax law. 
C) The alternative minimum tax applies to some S corporations. 
D) An S corporation may not allocate income and deduction items to specific shareholders like a partnership can.

Question 7

S corporation status provides many of the benefits of ____________________ taxation and at the same time gives the owner ____________________ ____________________ protection from creditors.
or

Accepted Answer

Partnershi

Question 8

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

Accepted Answer

A) Husband Jaime and wife Maria count as one shareholder. 
B) Grandmother Adela and granddaughter Maria count as one shareholder. 
C) Husband Jaime and the estate of wife Maria count as one shareholder. 
D) Husband Jaime and ex-wife Isabel count as one shareholder. 
E) None of the above statements is incorrect. 
A) Husband Jaime and wife Maria count as one shareholder. 
B) Grandmother Adela and granddaughter Maria count as one shareholder. 
C) Husband Jaime and the estate of wife Maria count as one shareholder. 
D) Husband Jaime and ex-wife Isabel count as one shareholder. 
E) None of the above statements is incorrect.

Question 9

When an S corporation liquidates, which of its tax attributes disappear?

Accepted Answer

A) AAA. 
B) AEP. 
C) Suspended losses. 
D) All of the above items disappear. 
A) AAA. 
B) AEP. 
C) Suspended losses. 
D) All of the above items disappear.

Question 10

The § 1202 exclusion of _________________ on the disposition of small business stock (is/is not) _________________ available for S stock.

Accepted Answer

The answer of The § 1202 exclusion of _________________ on...

Question 11

____________________ common stock and ____________________ preferred stock (with preference on dividends) are treated as two different classes of stock by the S corporation rules.

Accepted Answer

The answer of ____________________ common stock and ____________________ preferred stock...

Question 12

During 2012, Dana Rippel, the sole shareholder of a calendar year S corporation, received a distribution of $16,000.On December 31, 2011, her stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

Accepted Answer

A) Rippel recognizes a $1,000 LTCG. 
B) Rippel's stock basis will be $2,000. 
C) Rippel's ordinary income is $15,000. 
D) Rippel's return of capital is $11,000. 
A) Rippel recognizes a $1,000 LTCG. 
B) Rippel's stock basis will be $2,000. 
C) Rippel's ordinary income is $15,000. 
D) Rippel's return of capital is $11,000.

Question 13

Individuals Adam and Bonnie form an S corporation, with Adam contributing cash of $100,000 for a 50% interest and Bonnie contributing appreciated ordinary income property with an adjusted basis of $20,000 and a fair market value of $100,000.

Accepted Answer

The answer of Individuals Adam and Bonnie form an S...

Question 14

Post-termination distributions that are charged against OAA are received tax-free.

Accepted Answer

A) True 
 B)False

Question 15

The Section 179 expense deduction is a Schedule K item.

Accepted Answer

A) True 
 B)False

Question 16

Which type of distribution from an S corporation is taxed at the 0/15% Federal income tax rate?

Accepted Answer

A) AAA. 
B) Nonseparately computed income. 
C) OAA. 
D) AEP. 
E) None of the above. 
A) AAA. 
B) Nonseparately computed income. 
C) OAA. 
D) AEP. 
E) None of the above.

Question 17

Beginning in 2012, Ewing, Inc., an S corporation, holds a AAA balance of $695,100.During the year, the following items occur.   Ewing's ending AAA balance is:

Accepted Answer

A) $1,104,250. 
B) $1,110,250. 
C) $1,123,250. 
D) $1,180,250. 
A) $1,104,250. 
B) $1,110,250. 
C) $1,123,250. 
D) $1,180,250.

Question 18

A two-or-more member LLC operates under partnership tax principles.

Accepted Answer

A) True 
 B)False

Question 19

The alternative minimum tax applies to an S corporation.

Accepted Answer

A) True 
 B)False

Question 20

An S corporation may be subject to the following tax.

Accepted Answer

A) Built-in gains tax. 
B) Foreign earnings tax. 
C) Federal income tax. 
D) Alternative minimum tax. 
A) Built-in gains tax. 
B) Foreign earnings tax. 
C) Federal income tax. 
D) Alternative minimum tax.

Exam 22: S: Corporations

What method is used to allocate S corporation income or losses (unless an election to the contrary is made)?

During 2012, Oxen Corporation incurs the following transactions. Oxen maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder, Megan.As a result, Megan must recognize:

The amount of any distribution to an S corporation shareholder is equal to the ____________________ plus the fair market value of any other property distributed..

Grams, Inc., a calendar year S corporation, reports $20,000 DPGR and $15,000 of wages, and the S corporation's QPAI is $5,000.Janet has a 40% interest in the S corporation.All expenses that reduce DPGR are from wages, and all wages paid relate to DPGR.How much QPAI and wages are allocated to Janet?

An S corporation reports a recognized built-in gain of $110,000 and taxable income of $98,000.The company has an $8,000 NOL carryforward from a C corporation year, and a $7,000 business credit carryforward from a C corporation year.The built-in gains tax liability is:

Which statement is incorrect?

S corporation status provides many of the benefits of ____________________ taxation and at the same time gives the owner ____________________ ____________________ protection from creditors. or

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

When an S corporation liquidates, which of its tax attributes disappear?

The § 1202 exclusion of _________________ on the disposition of small business stock (is/is not) _________________ available for S stock.

____________________ common stock and ____________________ preferred stock (with preference on dividends) are treated as two different classes of stock by the S corporation rules.

During 2012, Dana Rippel, the sole shareholder of a calendar year S corporation, received a distribution of $16,000.On December 31, 2011, her stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

Individuals Adam and Bonnie form an S corporation, with Adam contributing cash of $100,000 for a 50% interest and Bonnie contributing appreciated ordinary income property with an adjusted basis of $20,000 and a fair market value of $100,000.

Post-termination distributions that are charged against OAA are received tax-free.

The Section 179 expense deduction is a Schedule K item.

Which type of distribution from an S corporation is taxed at the 0/15% Federal income tax rate?

Beginning in 2012, Ewing, Inc., an S corporation, holds a AAA balance of $695,100.During the year, the following items occur. Ewing's ending AAA balance is:

A two-or-more member LLC operates under partnership tax principles.

The alternative minimum tax applies to an S corporation.

An S corporation may be subject to the following tax.

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

S corporation status provides many of the benefits of taxation and at the same time gives the owner protection from creditors. or

The § 1202 exclusion of _ on the disposition of small business stock (is/is not) _ available for S stock.

common stock and preferred stock (with preference on dividends) are treated as two different classes of stock by the S corporation rules.