Exam 22: S: Corporations

On January 2, 2011, David loans his S corporation $10,000, and by the end of 2011 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2012, the company's operating income is $10,000.The company also makes distributions to David of $11,000.David reports a(n):

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

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

Bidden, Inc., a calendar year S corporation, incurred the following items. Calculate Bidden's nonseparately computed income.

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

For Federal income tax purposes, taxation of S corporations resembles that of partnerships.

Pepper, Inc., an S corporation, reports sales revenues of $400,000, taxable interest of $380,000, operating expenses of $250,000, and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable, if any?

Which tax provision does not apply to an S corporation?

As a general rule, where the S corporation provisions are silent, ____________________ rules apply.

Rents always are considered to be passive investment income in S status.

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

Ryan is the sole shareholder of Sweetwater Apartments, an S corporation in Sour Lake, Texas.At a time when his stock basis is $10,000, the corporation distributes appreciated property worth $100,000 (basis of $10,000).There is no built-in gain.Ryan's taxable gain is:

To make a valid S election, the entity must file a properly completed Form ____________________.

An S corporation shareholder's basis includes his or her direct investments plus a ratable share of any corporate liabilities.

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

Discuss the two methods of allocating tax-related items to S corporation shareholders.

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

Meeting the definition of a small business corporation is a ____________________ requirement for maintaining the S status.