Question 1

You are given the following facts about a 50% owner of an S corporation,and you are asked to prepare her ending stock basis.

Accepted Answer

A) $77,950. 
B) $82,750. 
C) $97,100. 
D) $103,225. 
A) $77,950. 
B) $82,750. 
C) $97,100. 
D) $103,225.

Question 2

You are given the following facts about a one-shareholder S corporation,and you are asked to prepare the shareholder's ending stock basis.

Accepted Answer

A) $163,960. 
B) $181,960. 
C) $213,960. 
D) $216,100. 
A) $163,960. 
B) $181,960. 
C) $213,960. 
D) $216,100.

Question 3

An S corporation with earnings and profits can make a taxable dividend distribution by making a AAA bypass election.

Accepted Answer

A) True 
 B)False

Question 4

Beginning in 2010,the AAA of Amit,Inc. ,an S corporation,has a balance of $725,000.During the year,the following items occur.   Amit's ending AAA balance is:

Accepted Answer

A) $1,153,150. 
B) $1,134,150. 
C) $1,127,650. 
D) $1,126,750. 
A) $1,153,150. 
B) $1,134,150. 
C) $1,127,650. 
D) $1,126,750.

Question 5

S corporation status allows shareholders to realize tax benefits from corporate losses ____________________.

Accepted Answer

The answer of S corporation status allows shareholders to realize...

Question 6

During 2010,Shirley Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.On December 31,2009,her 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 will be $2,000. 
C) Nutt's ordinary income is $15,000. 
D) Nutt's return of capital is $11,000. 
E) None of the above. 
A) Nutt recognizes a $1,000 LTCG. 
B) Nutt's stock basis will be $2,000. 
C) Nutt's ordinary income is $15,000. 
D) Nutt's return of capital is $11,000. 
E) None of the above.

Question 7

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

Accepted Answer

$42,570 + $15,000 +.

Question 8

Tax-exempt income at the corporate level does flow through to the shareholders.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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

Question 11

No maximum or minimum dollar sales or capitalization restrictions apply to S corporations.

Accepted Answer

A) True 
 B)False

Question 12

An S corporation is entitled to a deduction for its NOL carryovers.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Chris,the sole shareholder of Taylor,Inc. ,elects during 2010 to terminate the S election,effective January 1,2011.As of the end of 2010,Taylor,Inc. ,has AAA of $120,000 and OAA of $13,000.Chris receives a cash distribution of $130,000 on January 15,2011.If his stock basis is $220,000 before the distribution,calculate Chris' taxable amount and his ending stock basis.

Accepted Answer

Cash distributions reduce the AAA ($120,

Question 15

An S corporation can be a shareholder in another corporation.

Accepted Answer

A) True 
 B)False

Question 16

An S corporation may be subject to the following tax.

Accepted Answer

A) Built-in gains tax. 
B) Accumulated earnings tax. 
C) Personal holding company tax. 
D) Alternative minimum tax. 
E) None of the above is paid by S corporations. 
A) Built-in gains tax. 
B) Accumulated earnings tax. 
C) Personal holding company tax. 
D) Alternative minimum tax. 
E) None of the above is paid by S corporations.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

For Federal income tax purposes,taxation of S corporations resembles that of partnerships.

Accepted Answer

A) True 
 B)False

Question 19

Advise your client how income,expenses,gains and losses are allocated to shareholders.

Accepted Answer

In general,S corporation items are divid

Question 20

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.

Exam 22: S Corporations

You are given the following facts about a 50% owner of an S corporation,and you are asked to prepare her ending stock basis.

You are given the following facts about a one-shareholder S corporation,and you are asked to prepare the shareholder's ending stock basis.

An S corporation with earnings and profits can make a taxable dividend distribution by making a AAA bypass election.

Beginning in 2010,the AAA of Amit,Inc. ,an S corporation,has a balance of $725,000.During the year,the following items occur. Amit's ending AAA balance is:

S corporation status allows shareholders to realize tax benefits from corporate losses ____________________.

During 2010,Shirley Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.On December 31,2009,her 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?

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

Tax-exempt income at the corporate level does flow through to the shareholders.

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

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

No maximum or minimum dollar sales or capitalization restrictions apply to S corporations.

An S corporation is entitled to a deduction for its NOL carryovers.

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

An S corporation can be a shareholder in another corporation.

An S corporation may be subject to the following tax.

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

For Federal income tax purposes,taxation of S corporations resembles that of partnerships.

Advise your client how income,expenses,gains and losses are allocated to shareholders.

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

Part 1--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Part 2--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses,1231,and Recapure Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Distributions in Complete Liquidation and an Overview of Reorganizations

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

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