Exam 22: S: Corporations

If an S corporation has C corporate E & P and passive income in excess of ____________________ % of its gross receipts for ____________________ consecutive taxable years, the S election is terminated at the beginning of the ____________________ year. or or

Towne, Inc., a calendar year S corporation, has an AAA amount of $627,050 at the beginning of 2012. During the year, the following items occur. Calculate Towne's ending AAA balance.

An S shareholder's basis is not decreased by distributions treated as being paid from AAA.

Distribution of appreciated property is taxable to an S corporation.

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

On December 31, 2011, Erica Sumners owns one share of an S corporation's 10 outstanding shares of stock.The basis of Erica's share is $300.During 2012, the S corporation has no income or deductions, but incurs a loss of $3,650.Determine the amount of the loss allocated to Erica, and calculate her stock basis at the end of 2012.

If a resident alien shareholder moves outside the U.S., the S election is terminated.

Explain how the domestic production activities deduction is used for an S corporation.

S corporation status combines the legal environment of ____________________ with taxation similar to that applying to ____________________. or

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

An S election made before becoming a corporation is valid only beginning with the first 22-month tax year.

A qualifying S election requires the consent of ____________________ of the corporate shareholders. or

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

Consent to an S election must be in ____________________, and it must be generally filed by the election ____________________. or

Any distribution made by an S corporation during a tax year is taken into account before accounting for the year's losses.

On January 2, 2011, Tim loans his S corporation $10,000.By the end of 2011, Tim'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 Tim of $8,000.Tim reports a(n):

____________________ debt in an S corporation year is not treated as a second class of stock and does not disqualify the S election.

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?

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

Which corporation is eligible to make the S election?