Question 1

Which corporation is eligible to make the S election?

Accepted Answer

A)  Non-U.S. corporation. 
B)  Limited liability company. 
C)  Insurance company. 
D)  U.S. bank. 
E)  None of the above can select S status. 
A)  Non-U.S. corporation. 
B)  Limited liability company. 
C)  Insurance company. 
D)  U.S. bank. 
E)  None of the above can select S status. B

Question 2

Depreciation recapture income is a Schedule K item on the Form 1120S.

Accepted Answer

A) True 
 B)False  False

Question 3

An S corporation can claim a deduction for its NOL carryovers.

Accepted Answer

A) True 
 B)False  False

Question 4

Non­separately computed loss a S shareholder's stock basis.

Accepted Answer

The answer of Non­separately computed loss a S shareholder's stock...

Question 5

On January 1, 2014, Kinney, Inc., an electing S corporation, holds $5,000 of AEP and $9,000 in AAA. Kinney has two shareholders, Eric and Maria, each of whom owns 500 shares of Kinney's stock. Kinney's 2014 taxable income is $6,000. Kinney distributes $6,000 to each shareholder on February 1, 2014, and distributes another $3,000 to each shareholder on September 1. How is Erin taxed on the distribution?

Accepted Answer

A)  $500 dividend income. 
B)  $1,000 dividend income. 
C)  $1,500 dividend income. 
D)  $3,000 dividend income. 
E)  None of the above. 
A)  $500 dividend income. 
B)  $1,000 dividend income. 
C)  $1,500 dividend income. 
D)  $3,000 dividend income. 
E)  None of the above.

Question 6

Randall owns 800 shares in Fabrication, Inc., an S corporation in Moss Hill, Texas. In 2014, the basis in his stock is $30,000, before the adjustment for this year's losses. During 2014, 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)  No deduction. 
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. 
A)  No deduction. 
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.

Question 7

You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis.

Accepted Answer

The answer of You are given the following facts about...

Question 8

All tax preference items flow through the S corporation, to be included in the shareholders' AMT calculations.

Accepted Answer

A) True 
 B)False

Question 9

Your client is a C corporation that would like to convert to S status. Advise this corporation with respect to minimizing any built-in gains tax.

Accepted Answer

The C corporation should obtain sound ap

Question 10

Claude Bergeron sold 1,000 shares of Ditta, Inc., an S corporation, for $12,000. He had owned the stock for three years and had a stock basis of $111,000 in the shares. Claude is single, and he is the original owner of the § 1244 stock shares. Calculate the appropriate tax treatment.

Accepted Answer

A)  No gain or loss. 
B)  $50,000 LTCL; $49,000 ordinary deduction. 
C)  $50,000 ordinary deduction; $49,000 LTCL. 
D)  $99,000 long-term capital loss. 
A)  No gain or loss. 
B)  $50,000 LTCL; $49,000 ordinary deduction. 
C)  $50,000 ordinary deduction; $49,000 LTCL. 
D)  $99,000 long-term capital loss.

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

An S corporation is limited to a theoretical maximum of shareholders.

Accepted Answer

The answer of An S corporation is limited to a...

Question 13

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following reduces a shareholder's S corporation stock basis?

Accepted Answer

A)  Depletion deductions in excess of the basis of property. 
B)  Illegal kickbacks paid. 
C)  Nontaxable income. 
D)  Sales. 
A)  Depletion deductions in excess of the basis of property. 
B)  Illegal kickbacks paid. 
C)  Nontaxable income. 
D)  Sales.

Question 15

Chris, the sole shareholder of Taylor, Inc., elects during 2014 to terminate the S election, effective January 1, 2015. As of the end of 2014, Taylor, Inc., holds AAA of $120,000 and OAA of $13,000. Chris receives a cash distribution of $130,000 on January 15, 2015. If his stock basis is $220,000 before the distribution, calculate Chris's taxable amount and his ending stock basis.

Accepted Answer

Cash distributions reduce the AAA ($120,

Question 16

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.
a. Determine Bonnie's initial basis in her stock, assuming that she receives a 50% interest.
b. The S corporation sells the property for $120,000. Determine Adam's and Bonnie's stock basis after the sale.
c. Determine Adam's and Bonnie's gain or loss if the company is liquidated.

Accepted Answer

a. Bonnie's initial basis in her stock i

Question 17

Arizona is a(n) property state for purposes of the S corporation requirements.

Accepted Answer

The answer of Arizona is a(n) property state for purposes...

Question 18

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A termination occurs on the day that a corporation to be an S corporation.

Accepted Answer

The answer of A termination occurs on the day that...

Which corporation is eligible to make the S election?

Depreciation recapture income is a Schedule K item on the Form 1120S.

An S corporation can claim a deduction for its NOL carryovers.

Nonseparately computed loss a S shareholder's stock basis.

You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis.

All tax preference items flow through the S corporation, to be included in the shareholders' AMT calculations.

Your client is a C corporation that would like to convert to S status. Advise this corporation with respect to minimizing any built-in gains tax.

Claude Bergeron sold 1,000 shares of Ditta, Inc., an S corporation, for $12,000. He had owned the stock for three years and had a stock basis of $111,000 in the shares. Claude is single, and he is the original owner of the § 1244 stock shares. Calculate the appropriate tax treatment.

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.

An S corporation is limited to a theoretical maximum of shareholders.

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Which of the following reduces a shareholder's S corporation stock basis?

Arizona is a(n) property state for purposes of the S corporation requirements.

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

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

A termination occurs on the day that a corporation to be an S corporation.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings 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

Taxes on the Financial Statements

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

Which corporation is eligible to make the S election?

Depreciation recapture income is a Schedule K item on the Form 1120S.

An S corporation can claim a deduction for its NOL carryovers.

Non­separately computed loss a S shareholder's stock basis.

You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis.

All tax preference items flow through the S corporation, to be included in the shareholders' AMT calculations.

Your client is a C corporation that would like to convert to S status. Advise this corporation with respect to minimizing any built-in gains tax.

Claude Bergeron sold 1,000 shares of Ditta, Inc., an S corporation, for $12,000. He had owned the stock for three years and had a stock basis of $111,000 in the shares. Claude is single, and he is the original owner of the § 1244 stock shares. Calculate the appropriate tax treatment.

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.

An S corporation is limited to a theoretical maximum of shareholders.

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Which of the following reduces a shareholder's S corporation stock basis?

Arizona is a(n) property state for purposes of the S corporation requirements.

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

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

A termination occurs on the day that a corporation to be an S corporation.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings 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

Taxes on the Financial Statements

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

Nonseparately computed loss a S shareholder's stock basis.