Question 1

Persons who were S shareholders during any part of the year before the election date,but were not shareholders when the election was made,also must consent to an S election.

Accepted Answer

A) True 
 B)False

Question 2

​A one person LLC can be a shareholder of an S corporation.

Accepted Answer

A) True 
 B)False

Question 3

Which,if any,of the following can be eligible shareholders of an S corporation?

Accepted Answer

A) A partnership. 
B) A nonresident alien. 
C) A voting trust. 
D) The estate of a deceased shareholder. 
A) A partnership. 
B) A nonresident alien. 
C) A voting trust. 
D) The estate of a deceased shareholder.

Question 4

​Which statement is incorrect with respect to filing for an S election?

Accepted Answer

A) ​Form 2553 must be filed. 
B) ​All shareholders must consent. 
C) ​The election may not be filed in the previous year. 
D) ​An extension of time is available for filing Form 2553 
E) ​None of the above is incorrect 
A) ​Form 2553 must be filed. 
B) ​All shareholders must consent. 
C) ​The election may not be filed in the previous year. 
D) ​An extension of time is available for filing Form 2553 
E) ​None of the above is incorrect

Question 5

The termination of an S election occurs on the day after a corporation ceases to be a qualifying S corporation.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

In general,S corporation items are divid

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) $71,600 
B) $74,120 
C) $76,220 
D) $78,920 
A) $71,600 
B) $74,120 
C) $76,220 
D) $78,920

Question 9

Which,if any,of the following items has no effect on the stock basis of an S corporation shareholder?

Accepted Answer

A) Operating income. 
B) Long-term capital gain. 
C) Cost of goods sold. 
D) Short-term capital loss. 
E) All of the above affect stock basis. 
A) Operating income. 
B) Long-term capital gain. 
C) Cost of goods sold. 
D) Short-term capital loss. 
E) All of the above affect stock basis.

Question 10

An S corporation cannot be a shareholder in another corporation.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) Any method agreed to by all of the shareholders. 
B) Per-day allocation. 
C) FIFO method. 
D) LIFO method. 
A) Any method agreed to by all of the shareholders. 
B) Per-day allocation. 
C) FIFO method. 
D) LIFO method.

Question 12

Identify a disadvantage of being an S corporation.

Accepted Answer

A) Estates can be shareholders. 
B) Losses flow through immediately to the shareholders. 
C) The AMT on corporations is avoided. 
D) Tax-exempt income flows through as excludible to shareholders. 
E) None of the above is a disadvantage of the S election. 
A) Estates can be shareholders. 
B) Losses flow through immediately to the shareholders. 
C) The AMT on corporations is avoided. 
D) Tax-exempt income flows through as excludible to shareholders. 
E) None of the above is a disadvantage of the S election.

Question 13

A termination occurs on the day that a corporation ____________________ to be an S corporation.

Accepted Answer

The answer of A termination occurs on the day that...

Question 14

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

Accepted Answer

A) Husband Jaime and wife Maria count as one shareholder. 
B) Grandmother Adela and granddaughter Maria count as one shareholder. 
C) Husband Jaime and the estate of wife Maria count as one shareholder. 
D) Husband Jaime and ex-wife Isabel count as one shareholder. 
E) None of the above statements is incorrect. 
A) Husband Jaime and wife Maria count as one shareholder. 
B) Grandmother Adela and granddaughter Maria count as one shareholder. 
C) Husband Jaime and the estate of wife Maria count as one shareholder. 
D) Husband Jaime and ex-wife Isabel count as one shareholder. 
E) None of the above statements is incorrect.

Question 15

Explain the OAA concept.

Accepted Answer

S corporations report changes in the AAA

Question 16

​A corporation can revoke its S election prospectively.

Accepted Answer

A) True 
 B)False

Question 17

​The liquidation of C and S corporations is taxed in the same way.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 22: S Corporations

Persons who were S shareholders during any part of the year before the election date,but were not shareholders when the election was made,also must consent to an S election.

​A one person LLC can be a shareholder of an S corporation.

Which,if any,of the following can be eligible shareholders of an S corporation?

​Which statement is incorrect with respect to filing for an S election?

The termination of an S election occurs on the day after a corporation ceases to be a qualifying S corporation.

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

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

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,if any,of the following items has no effect on the stock basis of an S corporation shareholder?

An S corporation cannot be a shareholder in another corporation.

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

Identify a disadvantage of being an S corporation.

A termination occurs on the day that a corporation ____________________ to be an S corporation.

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

Explain the OAA concept.

​A corporation can revoke its S election prospectively.

​The liquidation of C and S corporations is taxed in the same way.

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

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

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

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxable Exchanges

Property Transactions, capital Gains and Losses, sec1231, and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganization

Partnerships

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

A one person LLC can be a shareholder of an S corporation.

Which statement is incorrect with respect to filing for an S election?

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

A corporation can revoke its S election prospectively.

The liquidation of C and S corporations is taxed in the same way.