Exam 22: S: Corporations

Four unrelated individuals acquire assets on behalf of Jump Corporation on May 21, 2012, purchased assets on June 5, 2012, and begin doing business on June 15, 2012.They subscribe to shares of stock, file articles of incorporation for Jump, and become shareholders on July 23, 2012.The S election must be filed no later than 2 1/2 months after:

During 2012, Rasic, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. On December 31, 2011, Rasic's stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. Calculate the amount and type of income that Rasic recognizes in 2012, assuming that there is no C corporation AEP.

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

Advise your client how income, expenses, gain, and losses are allocated to shareholders of an S corporation.

Yates Corporation elects S status, effective for calendar year 2012.Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1, 2012.The asset is sold at the end of 2012 for $130,800.What amount must Mark Farris, a 60% owner and subject to a 15% income tax rate, pay, if any?

When an S corporation liquidates, which of its tax attributes disappear?

An S corporation can take advantage of the dividends received deduction.

The § 1202 exclusion of gain is available on disposition of S corporation stock.

How may an S corporation manage its liability for the built-in gains tax?

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

Depreciation recapture income is a Schedule K item.

An S corporation can be a shareholder in another corporation.

Randall owns 800 shares in Fabrication, Inc., an S corporation in Moss Hill, Texas.In 2012, his basis in his stock is $30,000, before the adjustment for this year's losses.During 2012, 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?

Which statement is incorrect about an S corporation?

Distribution of loss property by an S corporation to a shareholder generally should be _________________.

Which item is not included in an S corporation's nonseparately computed income?

Grams, Inc., a calendar year S corporation, reports $20,000 DPGR and $15,000 of wages, and the S corporation's QPAI is $5,000.Janet has a 40% interest in the S corporation.All expenses that reduce DPGR are from wages, and all wages paid relate to DPGR.How much QPAI and wages are allocated to Janet?

The Section 179 expense deduction is a Schedule K item.

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.