Question 1

As with partnerships,the income,deductions,and tax credits of an S corporation ____________________ to the shareholders annually.

Accepted Answer

The answer of As with partnerships,the income,deductions,and tax credits of...

Question 2

An S corporation must possess which of the following characteristics?

Accepted Answer

A) Not more than one hundred shareholders. 
B) Corporation organized in the U.S. 
C) Only one class of stock. 
D) All of the above are required of an S corporation. 
E) None of the above are required of an S corporation. 
A) Not more than one hundred shareholders. 
B) Corporation organized in the U.S. 
C) Only one class of stock. 
D) All of the above are required of an S corporation. 
E) None of the above are required of an S corporation.

Question 3

​A distribution from the other adjustment account (OAA) is not taxable to an S shareholder.

Accepted Answer

A) True 
 B)False

Question 4

The Section 179 expense deduction is a Schedule K item on the Form 1120S.

Accepted Answer

A) True 
 B)False

Question 5

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

Accepted Answer

A) True 
 B)False

Question 6

Amit,Inc.,an S corporation,holds an AAA balance of $614,000 at the beginning of the tax year.During the year,the following items occur.
​
 
Amit's ending AAA balance is:

Accepted Answer

A) $1,055,620. 
B) $1,185,150. 
C) $1,191,150. 
D) $1,242,150. 
E) Some other amount. 
A) $1,055,620. 
B) $1,185,150. 
C) $1,191,150. 
D) $1,242,150. 
E) Some other amount.

Question 7

Any distribution made by an S corporation during a tax year is taken into account before accounting for the year's losses.

Accepted Answer

A) True 
 B)False

Question 8

​Lent Corporation converts to S corporation status for this year.Lent had been using the LIFO inventory method and held a LIFO inventory value of $510,000 (FIFO value of $650,000).How much tax must be added to the C corporation tax liability for the year before the S election,assuming that Lent is subject to a 35% tax rate.

Accepted Answer

A) ​$0. 
B) ​$12,250. 
C) ​$49,000. 
D) ​$140,000. 
A) ​$0. 
B) ​$12,250. 
C) ​$49,000. 
D) ​$140,000.

Question 9

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

Accepted Answer

A) Tax-exempt interest income. 
B) Section 1231 gain. 
C) Section 179 depreciation deduction. 
D) Depreciation recapture income. 
E) All of the above appear on Schedule K. 
A) Tax-exempt interest income. 
B) Section 1231 gain. 
C) Section 179 depreciation deduction. 
D) Depreciation recapture income. 
E) All of the above appear on Schedule K.

Question 10

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

Accepted Answer

A) True 
 B)False

Question 11

Yates Corporation elects S status,effective for current calendar tax year.Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1.The asset is sold at the end of the year for $130,800.What amount must Mark Farris,a 60% owner and subject to a 15% income tax rate,pay,if any?

Accepted Answer

A) $5,358 
B) $12,642 
C) $21,070 
D) $35,718 
A) $5,358 
B) $12,642 
C) $21,070 
D) $35,718

Question 12

The maximum number of actual shareholders in an S corporation is:

Accepted Answer

A) 75. 
B) 100. 
C) 200. 
D) Some other number. 
E) Indeterminable. 
A) 75. 
B) 100. 
C) 200. 
D) Some other number. 
E) Indeterminable.

Question 13

Bidden,Inc.,a calendar year S corporation,incurred the following items.
​
   
Calculate Bidden's nonseparately computed income.

Accepted Answer

The answer of Bidden,Inc.,a calendar year S corporation,incurred the following...

Question 14

Compare the distribution of property rules for an S corporation with the corresponding partnership rules.

Accepted Answer

The major difference involves distributi

Question 15

Which,if any,of the following items decreases an S corporation's AAA?

Accepted Answer

A) Section 1231 loss. 
B) Expenses related to tax-exempt income. 
C) Depletion in excess of basis. 
D) Distribution from earnings and profits. 
E) None of the above affects the AAA. 
A) Section 1231 loss. 
B) Expenses related to tax-exempt income. 
C) Depletion in excess of basis. 
D) Distribution from earnings and profits. 
E) None of the above affects the AAA.

Question 16

If an S corporation has C corporation E & P and passive investment income in excess of ____________________ % of its gross receipts for ____________________ consecutive taxable years,the S election is terminated at the beginning of the ____________________ year.

Accepted Answer

The answer of If an S corporation has C corporation...

Question 17

Most limited liability partnerships can own stock in an S corporation.

Accepted Answer

A) True 
 B)False

Question 18

A distribution from OAA is taxable.

Accepted Answer

A) True 
 B)False

Question 19

During the year,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.At the end of last year,his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

Accepted Answer

A) Nutt recognizes a $1,000 LTCG. 
B) Nutt's stock basis is $2,000. 
C) Nutt's ordinary income is $15,000. 
D) Nutt's tax-free return of capital is $11,000. 
A) Nutt recognizes a $1,000 LTCG. 
B) Nutt's stock basis is $2,000. 
C) Nutt's ordinary income is $15,000. 
D) Nutt's tax-free return of capital is $11,000.

Question 20

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

Accepted Answer

A) True 
 B)False

Exam 22: S Corporations

As with partnerships,the income,deductions,and tax credits of an S corporation ____________________ to the shareholders annually.

An S corporation must possess which of the following characteristics?

​A distribution from the other adjustment account (OAA) is not taxable to an S shareholder.

The Section 179 expense deduction is a Schedule K item on the Form 1120S.

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

Amit,Inc.,an S corporation,holds an AAA balance of $614,000 at the beginning of the tax year.During the year,the following items occur. ​ Amit's ending AAA balance is:

Any distribution made by an S corporation during a tax year is taken into account before accounting for the year's losses.

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

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

The maximum number of actual shareholders in an S corporation is:

Bidden,Inc.,a calendar year S corporation,incurred the following items. ​ Calculate Bidden's nonseparately computed income.

Compare the distribution of property rules for an S corporation with the corresponding partnership rules.

Which,if any,of the following items decreases an S corporation's AAA?

If an S corporation has C corporation E & P and passive investment income in excess of ____________________ % of its gross receipts for ____________________ consecutive taxable years,the S election is terminated at the beginning of the ____________________ year.

Most limited liability partnerships can own stock in an S corporation.

A distribution from OAA is taxable.

During the year,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.At the end of last year,his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

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 distribution from the other adjustment account (OAA) is not taxable to an S shareholder.

Amit,Inc.,an S corporation,holds an AAA balance of $614,000 at the beginning of the tax year.During the year,the following items occur. Amit's ending AAA balance is:

Bidden,Inc.,a calendar year S corporation,incurred the following items. Calculate Bidden's nonseparately computed income.

If an S corporation has C corporation E & P and passive investment income in excess of % of its gross receipts for consecutive taxable years,the S election is terminated at the beginning of the year.