Exam 12: S: Corporations

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:

On January 2,2011,David loans his S corporation $10,000,and by the end of 2011 David'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 David of $11,000.David reports a(n):

Which item has no effect on an S corporation's AAA?

Compensation for services rendered to an S corporation is subject to FICA taxes.

An S corporation shareholder's basis includes his or her direct investments plus a ratable share of any corporate liabilities.

On January 1,2012,Zundel,Inc. ,an electing S corporation,has $4,000 of AEP and a balance of $10,000 in AAA.Zundel has two shareholders,Erin and Maine,each of whom owns 500 shares of Zundel's stock.Zundel's 2012 taxable income is $5,000.Zundel distributes $6,000 to each shareholder on February 1,2012,and distributes another $3,000 to each shareholder on September 1.How is Erin taxed on this distribution?

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

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

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?

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?

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

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

For Federal income tax purposes,taxation of S corporations resembles that of partnerships.

With respect to passive losses,there are three classes of income,losses,and credits: ____________________,____________________,and passive. or

An S corporation's separately stated items generally are identical to those separately stated by _________________________.

Non-separately computed loss ____________________ a S shareholder's stock basis.

You are given the following facts about a 40% owner of an S corporation,and you are asked to prepare her ending stock basis.

Which equity arrangement cannot be used by an S corporation?

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

Which statement is incorrect?