Question 1

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

Accepted Answer

A) Charitable contributions. 
B) Unreasonable compensation. 
C) Payroll tax penalty assessed. 
D) Domestic production activities deduction. 
E) None of the above. 
A) Charitable contributions. 
B) Unreasonable compensation. 
C) Payroll tax penalty assessed. 
D) Domestic production activities deduction. 
E) None of the above.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Which item does not appear on Schedule K of Form 1120S?

Accepted Answer

A) Intangible drilling costs. 
B) Foreign loss. 
C) Utilities expense. 
D) Recovery of a tax benefit. 
E) All of the above items appear on Schedule K. 
A) Intangible drilling costs. 
B) Foreign loss. 
C) Utilities expense. 
D) Recovery of a tax benefit. 
E) All of the above items appear on Schedule K.

Question 4

The LIFO recapture tax is a variation of the passive investment income penalty tax.

Accepted Answer

A) True 
 B)False

Question 5

An S shareholder's stock basis includes a ratable share of any S corporation liabilities.

Accepted Answer

A) True 
 B)False

Question 6

Blue Corporation elects S status effective for tax year 2012.As of January 1,2012,Blue's assets were appraised as follows.

Accepted Answer

The answer of Blue Corporation elects S status effective for...

Question 7

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.

Accepted Answer

A) True 
 B)False

Question 8

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

Accepted Answer

A) True 
 B)False

Question 9

Most IRAs can own stock in an S corporation.

Accepted Answer

A) True 
 B)False

Question 10

The Schedule M-3 is the same for a C corporation and an S corporation.

Accepted Answer

A) True 
 B)False

Question 11

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?

Accepted Answer

A) No deduction. 
B) $15,000 ordinary loss;$10,000 capital loss. 
C) $17,143 ordinary loss;$12,857 capital loss. 
D) $20,000 ordinary loss;$15,000 capital loss. 
A) No deduction. 
B) $15,000 ordinary loss;$10,000 capital loss. 
C) $17,143 ordinary loss;$12,857 capital loss. 
D) $20,000 ordinary loss;$15,000 capital loss.

Question 12

Where the S corporation rules are silent,partnership rules apply to the S corporation.

Accepted Answer

A) True 
 B)False

Question 13

A new S corporation shareholder can revoke the S election unilaterally,if he/she owns how much of the existing S corporation's stock?

Accepted Answer

A) More than 50%. 
B) 50% or more. 
C) The election can be revoked only if all of the shareholders consent. 
D) The election cannot be revoked during the first year of the new shareholder's ownership. 
A) More than 50%. 
B) 50% or more. 
C) The election can be revoked only if all of the shareholders consent. 
D) The election cannot be revoked during the first year of the new shareholder's ownership.

Question 14

An S corporation recognizes a ____________________ on any distribution of appreciated property.

Accepted Answer

The answer of An S corporation recognizes a ____________________ on...

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

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

Which item does not appear on Schedule K of Form 1120S?

The LIFO recapture tax is a variation of the passive investment income penalty tax.

An S shareholder's stock basis includes a ratable share of any S corporation liabilities.

Blue Corporation elects S status effective for tax year 2012.As of January 1,2012,Blue's assets were appraised as follows.

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.

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

Most IRAs can own stock in an S corporation.

The Schedule M-3 is the same for a C corporation and an S corporation.

Where the S corporation rules are silent,partnership rules apply to the S corporation.

A new S corporation shareholder can revoke the S election unilaterally,if he/she owns how much of the existing S corporation's stock?

An S corporation recognizes a ____________________ on any distribution of appreciated property.

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

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

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

Which item does not appear on Schedule K of Form 1120S?

The LIFO recapture tax is a variation of the passive investment income penalty tax.

An S shareholder's stock basis includes a ratable share of any S corporation liabilities.

Blue Corporation elects S status effective for tax year 2012.As of January 1,2012,Blue's assets were appraised as follows.

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.

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

Most IRAs can own stock in an S corporation.

The Schedule M-3 is the same for a C corporation and an S corporation.

Where the S corporation rules are silent,partnership rules apply to the S corporation.

A new S corporation shareholder can revoke the S election unilaterally,if he/she owns how much of the existing S corporation's stock?

An S corporation recognizes a ____________________ on any distribution of appreciated property.

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