Question 1

​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) ​Short-term capital gain. 
C) ​Advertising expenses. 
D) ​Long-term capital loss. 
E) ​All of the above affect stock basis. 
A) ​Operating income. 
B) ​Short-term capital gain. 
C) ​Advertising expenses. 
D) ​Long-term capital loss. 
E) ​All of the above affect stock basis.

Question 2

Pepper,Inc.,an S corporation in Norfolk,Virginia,has revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.Calculate any passive investment income penalty tax payable by this corporation.

Accepted Answer

The S corporation pa

Question 3

The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

Accepted Answer

A) True 
 B)False

Question 4

Mock Corporation converts to S corporation status in 2018.Mock used the LIFO inventory method in 2017 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 Mock's 2017 corporate tax liability,assuming that Mock is subject to a 35% tax rate.

Accepted Answer

A) $0 
B) $10,063 
C) $40,250 
D) $115,000 
E) Some other amount 
A) $0 
B) $10,063 
C) $40,250 
D) $115,000 
E) Some other amount

Question 5

An estate may be a shareholder of an S corporation.

Accepted Answer

A) True 
 B)False

Question 6

Form 1120S provides an S shareholder's computation of his or her stock basis.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) A Roth IRA. 
B) Partnership. 
C) A non-U.S. corporation. 
D) A nonqualifying trust. 
E) None of the above can own stock. 
A) A Roth IRA. 
B) Partnership. 
C) A non-U.S. corporation. 
D) A nonqualifying trust. 
E) None of the above can own stock.

Question 8

An S shareholder's stock basis can be reduced below zero.

Accepted Answer

A) True 
 B)False

Question 9

An S corporation is limited to a theoretical maximum of ____________________ shareholders.

Accepted Answer

The answer of An S corporation is limited to a...

Question 10

Samantha owned 1,000 shares in Evita,Inc.,an S corporation,that uses the calendar year.On October 11,Samantha sells all of her Evita stock.Her stock basis at the beginning of the tax year was $60,000.Evita's ordinary income for the year was $22,000,and she receives a distribution of $35,000 on May 3rd.Her stock basis at the time of the sale is:

Accepted Answer

A) $117,000. 
B) $82,000. 
C) $60,000. 
D) $47,000. 
A) $117,000. 
B) $82,000. 
C) $60,000. 
D) $47,000.

Question 11

An S corporation is subject to the following tax(es).

Accepted Answer

A) Corporate income tax (§ 11). 
B) Built-in gains tax. 
C) Alternative minimum tax. 
D) None of the above apply to S corporations. 
A) Corporate income tax (§ 11). 
B) Built-in gains tax. 
C) Alternative minimum tax. 
D) None of the above apply to S corporations.

Question 12

Most IRAs cannot own stock in an S corporation.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

S corporations are treated as partnerships under state property laws.

Accepted Answer

A) True 
 B)False

Question 15

You are a 60% owner of an S corporation.Calculate your ending stock basis,based upon these facts.

Accepted Answer

$52,600 + $15,000 +.

Question 16

​The AAA begins with a zero balance on the first day of an S corporation's first tax year.

Accepted Answer

A) True 
 B)False

Question 17

You are given the following facts about a 50% owner of an S corporation.Compute her ending stock basis.
​

Accepted Answer

A) $80,950. 
B) $85,750. 
C) $100,100. 
D) $106,225. 
A) $80,950. 
B) $85,750. 
C) $100,100. 
D) $106,225.

Question 18

On January 2,2016,David loans his S corporation $10,000.By the end of 2016 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2017,the company's operating income is $10,000.The company makes 2017 distributions to David of $11,000.David reports a(n):

Accepted Answer

A) $1,000 LTCG. 
B) $3,000 LTCG. 
C) $11,000 LTCG. 
D) Loan basis of $10,000. 
A) $1,000 LTCG. 
B) $3,000 LTCG. 
C) $11,000 LTCG. 
D) Loan basis of $10,000.

Question 19

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

Accepted Answer

A) True 
 B)False

Question 20

​A former spouse is treated as being in the same family as the individual to whom he or she was married,for purposes of determining the number of S corporation shareholders.

Accepted Answer

A) True 
 B)False

Exam 22: S Corporations

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

Pepper,Inc.,an S corporation in Norfolk,Virginia,has revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.Calculate any passive investment income penalty tax payable by this corporation.

The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

An estate may be a shareholder of an S corporation.

Form 1120S provides an S shareholder's computation of his or her stock basis.

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

An S shareholder's stock basis can be reduced below zero.

An S corporation is limited to a theoretical maximum of ____________________ shareholders.

An S corporation is subject to the following tax(es).

Most IRAs cannot own stock in an S corporation.

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

S corporations are treated as partnerships under state property laws.

You are a 60% owner of an S corporation.Calculate your ending stock basis,based upon these facts.

​The AAA begins with a zero balance on the first day of an S corporation's first tax year.

You are given the following facts about a 50% owner of an S corporation.Compute her ending stock basis. ​

On January 2,2016,David loans his S corporation $10,000.By the end of 2016 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2017,the company's operating income is $10,000.The company makes 2017 distributions to David of $11,000.David reports a(n):

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

​A former spouse is treated as being in the same family as the individual to whom he or she was married,for purposes of determining the number of S corporation shareholders.

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

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

The AAA begins with a zero balance on the first day of an S corporation's first tax year.

You are given the following facts about a 50% owner of an S corporation.Compute her ending stock basis.

A former spouse is treated as being in the same family as the individual to whom he or she was married,for purposes of determining the number of S corporation shareholders.