Question 1

A distribution from OAA is not taxable.

Accepted Answer

A) True 
 B)False

Question 2

An S shareholder's basis in his or her stock can be reduced below zero.

Accepted Answer

A) True 
 B)False

Question 3

Depreciation recapture income is a ____________________ computed amount.

Accepted Answer

The answer of Depreciation recapture income is a ____________________ computed...

Question 4

An S shareholder who dies during the corporate tax year must report his or her share of the pro rata income (or loss)up to the date of death on the final individual tax return.

Accepted Answer

A) True 
 B)False

Question 5

List some of the separately stated items listed on Schedule K of the Form 1120S.

Accepted Answer

The answer of List some of the separately stated items...

Question 6

Net operating losses incurred before an S election do not flow through to the shareholders once the election is in effect.

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

Mock Corporation converts to S corporation status in 2012.Mock used the LIFO inventory method in 2011 and had a LIFO inventory of $435,000 (FIFO value of $550,000)on the date of the S election.How much tax must be added to the 2011 corporate tax liability,assuming that Mock is subject to a 35% tax rate.

Accepted Answer

A) $0. 
B) $10,062.50. 
C) $40,250. 
D) $115,000. 
A) $0. 
B) $10,062.50. 
C) $40,250. 
D) $115,000.

Question 9

An S corporation may not have a ____________________ alien shareholder.

Accepted Answer

The answer of An S corporation may not have a...

Question 10

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.

Accepted Answer

$11,000 ordinary income;$15,000 return o

Question 11

Which statement is correct with respect to an S corporation?

Accepted Answer

A) There is no advantage to also elect § 1244 stock. 
B) An S corporation can own 85% of an insurance company. 
C) An estate may be an S shareholder. 
D) A voting trust arrangement is not available. 
E) None of the above statements is correct. 
A) There is no advantage to also elect § 1244 stock. 
B) An S corporation can own 85% of an insurance company. 
C) An estate may be an S shareholder. 
D) A voting trust arrangement is not available. 
E) None of the above statements is correct.

Question 12

Towne,Inc. ,a calendar year S corporation,has an AAA amount of $627,050 at the beginning of 2012.During the year,the following items occur.
   Calculate Towne's ending AAA balance.

Accepted Answer

The answer of Towne,Inc. ,a calendar year S corporation,has an...

Question 13

____________________ common stock and ____________________ preferred stock (with preference on dividends)are treated as two different classes of stock by the S corporation rules.

Accepted Answer

The answer of ____________________ common stock and ____________________ preferred stock...

Question 14

Which statement is incorrect with respect to an S shareholder's consent?

Accepted Answer

A) A consent extension is available only if Form 2553 is filed on a timely basis,reasonable cause is given,and the interests of the government are not jeopardized. 
B) Both husband and wife must consent if one owns the stock as community property. 
C) An S election requires a consent from all of the S corporation's shareholders. 
D) A consent must be in writing. 
E) None of the above statements is incorrect. 
A) A consent extension is available only if Form 2553 is filed on a timely basis,reasonable cause is given,and the interests of the government are not jeopardized. 
B) Both husband and wife must consent if one owns the stock as community property. 
C) An S election requires a consent from all of the S corporation's shareholders. 
D) A consent must be in writing. 
E) None of the above statements is incorrect.

Question 15

The carryover period for the NOLs of a C corporation continues to run during S corporation years.

Accepted Answer

A) True 
 B)False

Question 16

To make a valid S election,the entity must file a properly completed Form ____________________.

Accepted Answer

The answer of To make a valid S election,the entity...

Question 17

A capital loss allocated to a shareholder always reduces the Other Adjustments Account.

Accepted Answer

A) True 
 B)False

Question 18

As a general rule,S corporation treatment is not advantageous when the individual tax rate far exceeds the applicable corporate tax rate.

Accepted Answer

A) True 
 B)False

Question 19

Distribution of appreciated property is taxable to an S corporation.

Accepted Answer

A) True 
 B)False

Question 20

If an S corporation shareholder's basis in a loan to the entity has been _________________,the shareholder recognizes gross income when the S corporation repays the shareholder.

Accepted Answer

The answer of If an S corporation shareholder's basis in...

A distribution from OAA is not taxable.

An S shareholder's basis in his or her stock can be reduced below zero.

Depreciation recapture income is a ____________________ computed amount.

An S shareholder who dies during the corporate tax year must report his or her share of the pro rata income (or loss)up to the date of death on the final individual tax return.

List some of the separately stated items listed on Schedule K of the Form 1120S.

Net operating losses incurred before an S election do not flow through to the shareholders once the election is in effect.

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 S corporation may not have a ____________________ alien shareholder.

Which statement is correct with respect to an S corporation?

Towne,Inc. ,a calendar year S corporation,has an AAA amount of $627,050 at the beginning of 2012.During the year,the following items occur. Calculate Towne's ending AAA balance.

common stock and preferred stock (with preference on dividends)are treated as two different classes of stock by the S corporation rules.

Which statement is incorrect with respect to an S shareholder's consent?

The carryover period for the NOLs of a C corporation continues to run during S corporation years.

To make a valid S election,the entity must file a properly completed Form ____________________.

A capital loss allocated to a shareholder always reduces the Other Adjustments Account.

As a general rule,S corporation treatment is not advantageous when the individual tax rate far exceeds the applicable corporate tax rate.

Distribution of appreciated property is taxable to an S corporation.

If an S corporation shareholder's basis in a loan to the entity has been _________________,the shareholder recognizes gross income when the S corporation repays the shareholder.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, operation, and Basis

Partnerships: Distributions, transfer of Interests, and Terminations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 12: S: Corporations

A distribution from OAA is not taxable.

An S shareholder's basis in his or her stock can be reduced below zero.

Depreciation recapture income is a ____________________ computed amount.

An S shareholder who dies during the corporate tax year must report his or her share of the pro rata income (or loss)up to the date of death on the final individual tax return.

List some of the separately stated items listed on Schedule K of the Form 1120S.

Net operating losses incurred before an S election do not flow through to the shareholders once the election is in effect.

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 S corporation may not have a ____________________ alien shareholder.

Which statement is correct with respect to an S corporation?

Towne,Inc. ,a calendar year S corporation,has an AAA amount of $627,050 at the beginning of 2012.During the year,the following items occur. Calculate Towne's ending AAA balance.

____________________ common stock and ____________________ preferred stock (with preference on dividends)are treated as two different classes of stock by the S corporation rules.

Which statement is incorrect with respect to an S shareholder's consent?

The carryover period for the NOLs of a C corporation continues to run during S corporation years.

To make a valid S election,the entity must file a properly completed Form ____________________.

A capital loss allocated to a shareholder always reduces the Other Adjustments Account.

As a general rule,S corporation treatment is not advantageous when the individual tax rate far exceeds the applicable corporate tax rate.

Distribution of appreciated property is taxable to an S corporation.

If an S corporation shareholder's basis in a loan to the entity has been _________________,the shareholder recognizes gross income when the S corporation repays the shareholder.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, operation, and Basis

Partnerships: Distributions, transfer of Interests, and Terminations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

common stock and preferred stock (with preference on dividends)are treated as two different classes of stock by the S corporation rules.