Question 1

Which item does not appear on Schedule K of Form 1120S?

Accepted Answer

A)  Tax-exempt interest income. 
B)  Section 1231 gain. 
C)  Section 179 depreciation deduction. 
D)  Depreciation recapture income. 
E)  All of the above appear on Schedule K. 
A)  Tax-exempt interest income. 
B)  Section 1231 gain. 
C)  Section 179 depreciation deduction. 
D)  Depreciation recapture income. 
E)  All of the above appear on Schedule K.

Question 2

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

Accepted Answer

A) True 
 B)False

Question 3

The Section 179 expense deduction is a Schedule K item on the Form 1120S.

Accepted Answer

A) True 
 B)False

Question 4

Discuss two ways that an S election may be terminated.

Accepted Answer

Broadly, there are two ways of terminati

Question 5

You are given the following facts about a 50% owner of an S corporation. Compute his ending stock basis.

Accepted Answer

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

Question 6

Only 51% of the shareholders must consent to an S election.

Accepted Answer

A) True 
 B)False

Question 7

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Accepted Answer

A) True 
 B)False

Question 8

Stock basis first is increased by income items, then by distributions, and finally decreased by ____________________.

Accepted Answer

The answer of Stock basis first is increased by income...

Question 9

An S shareholder's basis is increased by stock purchases and capital contributions.

Accepted Answer

A) True 
 B)False

Question 10

During 2014, 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 11

Identify a disadvantage of being an S corporation.

Accepted Answer

A)  Estates can be shareholders. 
B)  Losses flow through immediately to the shareholders. 
C)  The AMT on corporations is avoided. 
D)  Tax-exempt income flows through as excludible to shareholders. 
E)  None of the above is a disadvantage of the S election. 
A)  Estates can be shareholders. 
B)  Losses flow through immediately to the shareholders. 
C)  The AMT on corporations is avoided. 
D)  Tax-exempt income flows through as excludible to shareholders. 
E)  None of the above is a disadvantage of the S election.

Question 12

The corporate-level tax on recognized built-in gains applies in 2014 when an S corporation disposes of an asset in a taxable disposition within ten 12-months years after the date on which the S election took effect.

Accepted Answer

A) True 
 B)False

Question 13

You are a 60% owner of an S corporation. Calculate your ending stock basis, based upon these facts.

Accepted Answer

$52,600 + $15,000 +.

Question 14

An S corporation recognizes a on any distribution of appreciated property.

Accepted Answer

The answer of An S corporation recognizes a on any...

Question 15

The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

Accepted Answer

A) True 
 B)False

Question 16

Match the term with the proper response. There may be more than one responses for each term.

-Built-in gains tax

Accepted Answer

A) 	Gross receipts from royalties, passive rents, dividends, interest, etc. 
B) 	Penalty tax to stop an S corporation from avoiding the corporate tax on disposition of appreciated property. 
C) 	Cumulative total of undistributed non-separately and separately stated items. 
D) 	Tax-free distribution. 
E) 	Taxed as dividend income. 
A) 	Gross receipts from royalties, passive rents, dividends, interest, etc. 
B) 	Penalty tax to stop an S corporation from avoiding the corporate tax on disposition of appreciated property. 
C) 	Cumulative total of undistributed non-separately and separately stated items. 
D) 	Tax-free distribution. 
E) 	Taxed as dividend income.

Question 17

S corporations are treated as partnerships under state property laws.

Accepted Answer

A) True 
 B)False

Question 18

The choice of a flow-through entity for a closely-held corporation often is between a(n) (a Federal tax entity) and a(n) (a state tax entity).

Accepted Answer

S corporat

Question 19

A per-day, per-share allocation of flow-through S corporation items must be used, unless the shareholder disposes of the entire interest in the entity.

Accepted Answer

A) True 
 B)False

Question 20

Form 1120S provides an S shareholder's computation of his or her stock basis.

Accepted Answer

A) True 
 B)False

Which item does not appear on Schedule K of Form 1120S?

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

The Section 179 expense deduction is a Schedule K item on the Form 1120S.

Discuss two ways that an S election may be terminated.

You are given the following facts about a 50% owner of an S corporation. Compute his ending stock basis.

Only 51% of the shareholders must consent to an S election.

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Stock basis first is increased by income items, then by distributions, and finally decreased by ____________________.

An S shareholder's basis is increased by stock purchases and capital contributions.

During 2014, 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:

Identify a disadvantage of being an S corporation.

The corporate-level tax on recognized built-in gains applies in 2014 when an S corporation disposes of an asset in a taxable disposition within ten 12-months years after the date on which the S election took effect.

You are a 60% owner of an S corporation. Calculate your ending stock basis, based upon these facts.

An S corporation recognizes a on any distribution of appreciated property.

The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

Match the term with the proper response. There may be more than one responses for each term. -Built-in gains tax

S corporations are treated as partnerships under state property laws.

The choice of a flow-through entity for a closely-held corporation often is between a(n) (a Federal tax entity) and a(n) (a state tax entity).

A per-day, per-share allocation of flow-through S corporation items must be used, unless the shareholder disposes of the entire interest in the entity.

Form 1120S provides an S shareholder's computation of his or her stock basis.

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 item does not appear on Schedule K of Form 1120S?

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

The Section 179 expense deduction is a Schedule K item on the Form 1120S.

Discuss two ways that an S election may be terminated.

You are given the following facts about a 50% owner of an S corporation. Compute his ending stock basis.

Only 51% of the shareholders must consent to an S election.

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Stock basis first is increased by income items, then by distributions, and finally decreased by ____________________.

An S shareholder's basis is increased by stock purchases and capital contributions.

During 2014, 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:

Identify a disadvantage of being an S corporation.

The corporate-level tax on recognized built-in gains applies in 2014 when an S corporation disposes of an asset in a taxable disposition within ten 12-months years after the date on which the S election took effect.

You are a 60% owner of an S corporation. Calculate your ending stock basis, based upon these facts.

An S corporation recognizes a on any distribution of appreciated property.

The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

Match the term with the proper response. There may be more than one responses for each term. -Built-in gains tax

S corporations are treated as partnerships under state property laws.

The choice of a flow-through entity for a closely-held corporation often is between a(n) (a Federal tax entity) and a(n) (a state tax entity).

A per-day, per-share allocation of flow-through S corporation items must be used, unless the shareholder disposes of the entire interest in the entity.

Form 1120S provides an S shareholder's computation of his or her stock basis.

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