Question 1

It is not beneficial for an S corporation to issue § 1244 stock.

Accepted Answer

A) True 
 B)False

Question 2

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to an S corporation on February 14.By the end of the year, $60,000 of these receivables are collected.Calculate any built-in gains tax, assuming that there is sufficient taxable income.

Accepted Answer

A) $0. 
B) $10,000. 
C) $21,000. 
D) $35,000. 
A) $0. 
B) $10,000. 
C) $21,000. 
D) $35,000.

Question 3

A capital loss allocated to a shareholder always reduces the Other Adjustments Account.

Accepted Answer

A) True 
 B)False

Question 4

Which statement is incorrect with respect to an S shareholder's consent?

Accepted Answer

A) A consent extension is available only if Form 2553 is filed on a timely basis, reasonable cause is given, and the interests of the government are not jeopardized. 
B) Both husband and wife must consent if one owns the stock as community property. 
C) An S election requires a consent from all of the S corporation's shareholders. 
D) A consent must be in writing. 
E) None of the above statements is incorrect. 
A) A consent extension is available only if Form 2553 is filed on a timely basis, reasonable cause is given, and the interests of the government are not jeopardized. 
B) Both husband and wife must consent if one owns the stock as community property. 
C) An S election requires a consent from all of the S corporation's shareholders. 
D) A consent must be in writing. 
E) None of the above statements is incorrect.

Question 5

There is no limit on the amount of passive investment income that an S corporation can earn during the year.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

An S shareholder's basis in his or her stock can be reduced below zero.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

The answer of Meeting the definition of a small business...

Question 9

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 10

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 11

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

Accepted Answer

The answer of As a general rule, where the S...

Question 12

List some of the separately stated items listed on Schedule K of the Form 1120S.

Accepted Answer

The answer of List some of the separately stated items...

Question 13

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 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) A resident alien. 
B) A U.S.partnership. 
C) A foreign corporation. 
D) None of the above can own S stock. 
A) A resident alien. 
B) A U.S.partnership. 
C) A foreign corporation. 
D) None of the above can own S stock.

Question 17

Which statement is correct with respect to an S corporation?

Accepted Answer

A) There is no advantage to also elect § 1244 stock. 
B) An S corporation can own 85% of an insurance company. 
C) An estate may be an S shareholder. 
D) A voting trust arrangement is not available. 
E) None of the above statements is correct. 
A) There is no advantage to also elect § 1244 stock. 
B) An S corporation can own 85% of an insurance company. 
C) An estate may be an S shareholder. 
D) A voting trust arrangement is not available. 
E) None of the above statements is correct.

Question 18

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:

Accepted Answer

A) $0. 
B) $10,000. 
C) $90,000. 
D) $100,000. 
A) $0. 
B) $10,000. 
C) $90,000. 
D) $100,000.

Question 19

An S shareholder's stock basis includes a ratable share of any S corporation liabilities.

Accepted Answer

A) True 
 B)False

Question 20

Passive investment income includes net capital gains from the sale of stocks and securities.

Accepted Answer

A) True 
 B)False

Exam 22: S: Corporations

It is not beneficial for an S corporation to issue § 1244 stock.

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to an S corporation on February 14.By the end of the year, $60,000 of these receivables are collected.Calculate any built-in gains tax, assuming that there is sufficient taxable income.

A capital loss allocated to a shareholder always reduces the Other Adjustments Account.

Which statement is incorrect with respect to an S shareholder's consent?

There is no limit on the amount of passive investment income that an S corporation can earn during the year.

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

An S shareholder's basis in his or her stock can be reduced below zero.

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

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:

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

List some of the separately stated items listed on Schedule K of the Form 1120S.

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:

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

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

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

Which statement is correct with respect to an S corporation?

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:

An S shareholder's stock basis includes a ratable share of any S corporation liabilities.

Passive investment income includes net capital gains from the sale of stocks and securities.

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

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