Question 1

____________________ husband and wife must consent to an S election if they own their stock jointly.

Accepted Answer

The answer of ____________________ husband and wife must consent to...

Question 2

If any entity electing S status is currently a C corporation,NOL carryovers from prior years ____________________ be used in an S corporation year.

Accepted Answer

The answer of If any entity electing S status is...

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Claude Bergeron sold 1,000 shares of Ditta,Inc.,an S corporation,for $12,000.He had owned the stock for three years and had a stock basis of $111,000 in the shares.Claude is single,and he is the original owner of the § 1244 stock shares.Calculate the appropriate tax treatment.

Accepted Answer

A) No gain or loss. 
B) $50,000 LTCL; $49,000 ordinary deduction. 
C) $50,000 ordinary deduction; $49,000 LTCL. 
D) $99,000 long-term capital loss. 
A) No gain or loss. 
B) $50,000 LTCL; $49,000 ordinary deduction. 
C) $50,000 ordinary deduction; $49,000 LTCL. 
D) $99,000 long-term capital loss.

Question 5

Which item is not included in an S corporation's nonseparately computed income?

Accepted Answer

A) Net sales. 
B) Cost of goods sold. 
C) Dividends received. 
D) Depreciation recapture. 
A) Net sales. 
B) Cost of goods sold. 
C) Dividends received. 
D) Depreciation recapture.

Question 6

An S corporation does not recognize a loss when distributing assets that are worth less than their basis.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Depreciation recapture income is a Schedule K item on the Form 1120S.

Accepted Answer

A) True 
 B)False

Question 9

Fred is the sole shareholder of an S corporation in Fort Deposit,Alabama.At a time when his stock basis is $20,000,the corporation distributes appreciated property worth $100,000 (basis of $20,000).Fred's taxable gain is:

Accepted Answer

A) $0. 
B) $10,000. 
C) $80,000. 
D) $100,000. 
E) None of the above. 
A) $0. 
B) $10,000. 
C) $80,000. 
D) $100,000. 
E) None of the above.

Question 10

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

Accepted Answer

A) True 
 B)False

Question 11

An S corporation's LIFO recapture amount equals the excess of the inventory's value under ____________________ over the ____________________ value.

Accepted Answer

The answer of An S corporation's LIFO recapture amount equals...

Question 12

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 13

An S corporation cannot incur a tax liability at the corporation level.

Accepted Answer

A) True 
 B)False

Question 14

Tax-exempt income at the corporate level flows through as exempt to S shareholders.

Accepted Answer

A) True 
 B)False

Question 15

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to S status on February 14.By the end of the year,$60,000 of these receivables are collected.Calculate any built-in gains tax,assuming that there is sufficient taxable income.

Accepted Answer

A) $0 
B) $10,000 
C) $21,000 
D) $35,000 
E) Some other amount 
A) $0 
B) $10,000 
C) $21,000 
D) $35,000 
E) Some other amount

Question 16

In the case of a complete termination of an S corporation interest,a ____________________ tax year may occur.

Accepted Answer

The answer of In the case of a complete termination...

Question 17

An S corporation with substantial AEP records 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 is:

Accepted Answer

A) $0. 
B) $40,923. 
C) $116,923. 
D) $136,500. 
A) $0. 
B) $40,923. 
C) $116,923. 
D) $136,500.

Question 18

The corporate-level tax on recognized built-in gains applies when an S corporation disposes of an asset in a taxable disposition within five years after the date on which the S election took effect.

Accepted Answer

A) True 
 B)False

Question 19

Which corporation is eligible to make the S election?

Accepted Answer

A) Non-U.S. corporation. 
B) Limited liability company. 
C) Insurance company. 
D) U.S. bank. 
E) None of the above can select S status. 
A) Non-U.S. corporation. 
B) Limited liability company. 
C) Insurance company. 
D) U.S. bank. 
E) None of the above can select S status.

Question 20

​Any tax-exempt interest that appears in OAA affects both stock basis and AAA.

Accepted Answer

A) True 
 B)False

Exam 22: S Corporations

____________________ husband and wife must consent to an S election if they own their stock jointly.

If any entity electing S status is currently a C corporation,NOL carryovers from prior years ____________________ be used in an S corporation year.

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

Claude Bergeron sold 1,000 shares of Ditta,Inc.,an S corporation,for $12,000.He had owned the stock for three years and had a stock basis of $111,000 in the shares.Claude is single,and he is the original owner of the § 1244 stock shares.Calculate the appropriate tax treatment.

Which item is not included in an S corporation's nonseparately computed income?

An S corporation does not recognize a loss when distributing assets that are worth less than their basis.

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

Depreciation recapture income is a Schedule K item on the Form 1120S.

Fred is the sole shareholder of an S corporation in Fort Deposit,Alabama.At a time when his stock basis is $20,000,the corporation distributes appreciated property worth $100,000 (basis of $20,000).Fred's taxable gain is:

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

An S corporation's LIFO recapture amount equals the excess of the inventory's value under ____________________ over the ____________________ value.

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 cannot incur a tax liability at the corporation level.

Tax-exempt income at the corporate level flows through as exempt to S shareholders.

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to S status on February 14.By the end of the year,$60,000 of these receivables are collected.Calculate any built-in gains tax,assuming that there is sufficient taxable income.

In the case of a complete termination of an S corporation interest,a ____________________ tax year may occur.

An S corporation with substantial AEP records 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 is:

The corporate-level tax on recognized built-in gains applies when an S corporation disposes of an asset in a taxable disposition within five years after the date on which the S election took effect.

Which corporation is eligible to make the S election?

​Any tax-exempt interest that appears in OAA affects both stock basis and AAA.

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

An S corporation's LIFO recapture amount equals the excess of the inventory's value under over the value.

Any tax-exempt interest that appears in OAA affects both stock basis and AAA.