Question 1

​Which type of distribution from an S corporation is taxed at ordinary income rates?

Accepted Answer

A) ​AAA. 
B) ​PTI 
C) ​OAA 
D) ​AEP 
E) ​None of the above. 
A) ​AAA. 
B) ​PTI 
C) ​OAA 
D) ​AEP 
E) ​None of the above.

Question 2

It is not beneficial for an S corporation to issue § 1244 stock.

Accepted Answer

A) True 
 B)False

Question 3

Where the S corporation rules are silent,C corporation provisions apply.

Accepted Answer

A) True 
 B)False

Question 4

On January 1,Bobby and Alice own equally all of the stock of an electing S corporation called Prairie Dirt Delight.The entity incurs a $60,000 loss for a non-leap year.On the 200th day of the year (not a leap year),Bobby sells his one-half of the stock to his son,Saul.How much of the $60,000 loss,if any,is allocated to Bobby?

Accepted Answer

A) $0 
B) $13,562 
C) $16,438 
D) $32,877 
A) $0 
B) $13,562 
C) $16,438 
D) $32,877

Question 5

Pepper,Inc.,an S corporation,holds a $1 million balance in accumulated E&P.It reports sales revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable,if any?

Accepted Answer

A) $380,000. 
B) $185,000. 
C) $40,895. 
D) ​$0. 
A) $380,000. 
B) $185,000. 
C) $40,895. 
D) ​$0.

Question 6

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

Accepted Answer

A) True 
 B)False

Question 7

Which item has no effect on an S corporation's AAA?

Accepted Answer

A) Stock purchase by a shareholder. 
B) Interest expense. 
C) Cost of goods sold. 
D) Capital loss. 
A) Stock purchase by a shareholder. 
B) Interest expense. 
C) Cost of goods sold. 
D) Capital loss.

Question 8

A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

Accepted Answer

A) True 
 B)False

Question 9

Kinney,Inc.,an electing S corporation,holds $5,000 of AEP and $9,000 in AAA at the beginning of the calendar tax year.Kinney has two shareholders,Eric and Maria,each of whom owns 500 shares of Kinney's stock.Kinney's taxable income is $6,000 for the year.Kinney distributes $6,000 to each shareholder on February 1,and it distributes another $3,000 to each shareholder on September 1.How is Eric taxed on the distribution?

Accepted Answer

A) $500 dividend income. 
B) $1,000 dividend income. 
C) $1,500 dividend income. 
D) $3,000 dividend income. 
A) $500 dividend income. 
B) $1,000 dividend income. 
C) $1,500 dividend income. 
D) $3,000 dividend income.

Question 10

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

Accepted Answer

A) True 
 B)False

Question 11

Which statement is incorrect?

Accepted Answer

A) S corporations are treated as corporations under state law. 
B) S corporations are treated as partnerships for Federal income tax purposes. 
C) Distributions of appreciated property are taxable to the S corporation. 
D) None of the above statements is incorrect. 
A) S corporations are treated as corporations under state law. 
B) S corporations are treated as partnerships for Federal income tax purposes. 
C) Distributions of appreciated property are taxable to the S corporation. 
D) None of the above statements is incorrect.

Question 12

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity,but distributions do not reduce loan basis.

Accepted Answer

A) True 
 B)False

Question 13

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Some ____________________and ​ taxation rules apply to an S corporation.

Accepted Answer

partnershi

Question 15

​This year,Sammy Joseph,the sole shareholder of a calendar year S corporation,received a distribution of $17,000.On December 31 of the prior year,his stock basis was $3,000.The corporation earned $12,000 ordinary income during the year.It has no accumulated E&P.Which statement is correct?

Accepted Answer

A) ​Joseph recognizes a $2,000 LTCG. 
B) ​Joseph's stock basis will be $2,000. 
C) ​Joseph's ordinary income is $15,000. 
D) ​Joseph's return of capital is $11,000. 
A) ​Joseph recognizes a $2,000 LTCG. 
B) ​Joseph's stock basis will be $2,000. 
C) ​Joseph's ordinary income is $15,000. 
D) ​Joseph's return of capital is $11,000.

Question 16

What statement is correct with respect to an S corporation?

Accepted Answer

A) There is no advantage to elect § 1244 stock. 
B) An S corporation can own up to 85% of an insurance company. 
C) A resident alien may be a shareholder. 
D) A voting trust arrangement is not available. 
E) None of the above statements is true. 
A) There is no advantage to elect § 1244 stock. 
B) An S corporation can own up to 85% of an insurance company. 
C) A resident alien may be a shareholder. 
D) A voting trust arrangement is not available. 
E) None of the above statements is true.

Question 17

Discuss two ways that an S election may be terminated.

Accepted Answer

Broadly,there are two ways of terminatin

Question 18

An S corporation's separately stated items generally are identical to those separately stated by _________________________.

Accepted Answer

The answer of An S corporation's separately stated items generally...

Question 19

Since loss property receives a ____________________ in basis without any loss recognition,S corporation distributions of loss property should be ____________________.

Accepted Answer

The answer of Since loss property receives a ____________________ in...

Question 20

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

Accepted Answer

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

Exam 22: S Corporations

​Which type of distribution from an S corporation is taxed at ordinary income rates?

It is not beneficial for an S corporation to issue § 1244 stock.

Where the S corporation rules are silent,C corporation provisions apply.

Pepper,Inc.,an S corporation,holds a $1 million balance in accumulated E&P.It reports sales revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable,if any?

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

Which item has no effect on an S corporation's AAA?

A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

Which statement is incorrect?

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity,but distributions do not reduce loan basis.

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Some ____________________and ​ taxation rules apply to an S corporation.

​This year,Sammy Joseph,the sole shareholder of a calendar year S corporation,received a distribution of $17,000.On December 31 of the prior year,his stock basis was $3,000.The corporation earned $12,000 ordinary income during the year.It has no accumulated E&P.Which statement is correct?

What statement is correct with respect to an S corporation?

Discuss two ways that an S election may be terminated.

An S corporation's separately stated items generally are identical to those separately stated by _________________________.

Since loss property receives a ____________________ in basis without any loss recognition,S corporation distributions of loss property should be ____________________.

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

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 type of distribution from an S corporation is taxed at ordinary income rates?

Some ____________________and taxation rules apply to an S corporation.

This year,Sammy Joseph,the sole shareholder of a calendar year S corporation,received a distribution of $17,000.On December 31 of the prior year,his stock basis was $3,000.The corporation earned $12,000 ordinary income during the year.It has no accumulated E&P.Which statement is correct?

Since loss property receives a in basis without any loss recognition,S corporation distributions of loss property should be .

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