Exam 12: S: Corporations

Samantha owned 1,000 shares in Evita,Inc. ,an S corporation,that uses the calendar year.On October 11,2012,Samantha sells all of her Evita stock.Her basis at the beginning of 2012 was $60,000.Her share of the corporate income for 2012 was $22,000,and she receives a distribution of $35,000 between January 1 and October 11,2012.Her stock basis at the time of the sale is:

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

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

What method is used to allocate S corporation income or losses (unless an election to the contrary is made)?

Which of these tax provisions does not apply to an S corporation?

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

Which corporation is eligible to make the S election?

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

No maximum or minimum dollar sales or capitalization restrictions apply to S corporations.

Outline the requirements that an entity must meet to elect S corporation status.

Which statement is incorrect about an S corporation?

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

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

If an S corporation excludes cancellation of debt (COD)income from gross income,the excluded amount is applied to _________________ S corporation tax attributes.

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

Identify a disadvantage of being an S corporation.

An S corporation with substantial AEP has operating revenues of $410,000,taxable interest income of $390,000,operating expenses of $260,000,and deductions attributable to the interest of $150,000.The passive income penalty tax payable,if any,is:

There is no limit on the amount of passive investment income that an S corporation can earn during the year.

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

How large must total assets on Schedule L be at the end of the year for an S corporation to be required to file Schedule M-3?