Exam 12: 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.

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.

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

Depreciation recapture income is a Schedule K item.

Distributions of which assets during an S corporation's post-termination period receive favorable income tax treatment?

Milke,Inc. ,an S corporation,has gross receipts of $190,000 and gross income of $170,000.Milke has AEP of $22,000 and ordinary income of $29,000.The company reports passive investment income of $100,000,with $40,000 of expenses directly related to the production of passive investment income.Calculate Milke's excess net passive income and any passive investment income penalty tax.

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

Rents always are considered to be passive investment income in S status.

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.

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

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

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity,but distributions do not.

The passive loss limitations apply at the S corporation shareholder level.

An item that appears in the "Other Adjustments Account" affects stock basis,but not AAA,such as tax-exempt interest.

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

An S corporation's LIFO recapture amount equals the excess of the inventory's value under ____________________ over the ____________________ value.

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.

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

Pepper,Inc. ,an S corporation,reports sales revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable,if any?

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