Question 1

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 2

An S corporation reports a recognized built-in gain of $110,000 and taxable income of $98,000.The company has an $8,000 NOL carryforward from a C corporation year, and a $7,000 business credit carryforward from a C corporation year.The built-in gains tax liability is:

Accepted Answer

A) $31,500. 
B) $28,700. 
C) $24,500. 
D) $0. 
A) $31,500. 
B) $28,700. 
C) $24,500. 
D) $0.

Question 3

Which, if any, of the following items has no effect on the stock basis of an S corporation shareholder?

Accepted Answer

A) Short-term capital loss. 
B) Long-term capital gain. 
C) Cost of goods sold. 
D) Net sales. 
E) A mortgage taken by the S corporation. 
A) Short-term capital loss. 
B) Long-term capital gain. 
C) Cost of goods sold. 
D) Net sales. 
E) A mortgage taken by the S corporation.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

The corporate ____________________ ____________________ tax is avoided in an S corporation.

Accepted Answer

The answer of The corporate ____________________ ____________________ tax is avoided...

Question 6

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

Accepted Answer

A) Taxable dividends. 
B) Stock dividend (taxable). 
C) Depreciation recapture income. 
D) Tax-exempt income. 
E) None of the above. 
A) Taxable dividends. 
B) Stock dividend (taxable). 
C) Depreciation recapture income. 
D) Tax-exempt income. 
E) None of the above.

Question 7

An S corporation does not recognize a loss when distributing assets that are worth less than their basis.

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 election is made on the shareholder's Form 1040.

Accepted Answer

A) True 
 B)False

Question 10

Post-termination distributions by a former S corporation that are charged against ____________________ do not get tax-free treatment.

Accepted Answer

The answer of Post-termination distributions by a former S corporation...

Question 11

Which tax provision does not apply to an S corporation?

Accepted Answer

A) DPAD. 
B) Section 1244 stock. 
C) Penalty for failure to file. 
D) 10% charitable contribution limitation. 
E) Estimated tax payments. 
A) DPAD. 
B) Section 1244 stock. 
C) Penalty for failure to file. 
D) 10% charitable contribution limitation. 
E) Estimated tax payments.

Question 12

Depletion in excess of basis in property causes a(n) ____________________ adjustment to an S shareholder's basis.
or

Accepted Answer

The answer of Depletion in excess of basis in property...

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

A calendar year C corporation reports a $41,000 NOL in 2011, but it elects S status for 2012 and generates an NOL of $30,000 in that year. At all times during 2012, the stock of the corporation was owned by the same 10 shareholders, each of whom owned 10% of the stock. Kris, one of the 10 shareholders, holds an S stock basis of $2,300 at the beginning of 2012. How much of the 2012 loss, if any, is deductible by Kris?

Accepted Answer

A) $0. 
B) $2,300. 
C) $3,000. 
D) $7,100. 
A) $0. 
B) $2,300. 
C) $3,000. 
D) $7,100.

Question 15

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 16

For a new corporation, a premature S election may not be effective.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A per-day, per-share method must be used

Question 18

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

Accepted Answer

A) Charitable contributions. 
B) Unreasonable compensation. 
C) Payroll tax penalty assessed. 
D) Domestic production activities deduction. 
E) None of the above. 
A) Charitable contributions. 
B) Unreasonable compensation. 
C) Payroll tax penalty assessed. 
D) Domestic production activities deduction. 
E) None of the above.

Question 19

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

Accepted Answer

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

Question 20

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

Exam 22: S: Corporations

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.

An S corporation reports a recognized built-in gain of $110,000 and taxable income of $98,000.The company has an $8,000 NOL carryforward from a C corporation year, and a $7,000 business credit carryforward from a C corporation year.The built-in gains tax liability is:

Which, if any, of the following items has no effect on the stock basis of an S corporation shareholder?

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

The corporate ____________________ ____________________ tax is avoided in an S corporation.

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

An S corporation does not recognize a loss when distributing assets that are worth less than their basis.

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

An S election is made on the shareholder's Form 1040.

Post-termination distributions by a former S corporation that are charged against ____________________ do not get tax-free treatment.

Which tax provision does not apply to an S corporation?

Depletion in excess of basis in property causes a(n) ____________________ adjustment to an S shareholder's basis. or

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

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

For a new corporation, a premature S election may not be effective.

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

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

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

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 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

The corporate tax is avoided in an S corporation.

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