Question 1

An S corporation's AAA cannot have a negative balance.

Accepted Answer

A) True 
 B)False

Question 2

Charitable contributions are subject to the 10% limitation at the S corporation level.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

____________________ debt issued in an S corporation year is not treated as a second class of stock and does not disqualify the S election.

Accepted Answer

The answer of ____________________ debt issued in an S corporation...

Question 5

The corporate ____________________ tax is avoided in an S corporation.

Accepted Answer

The answer of The corporate ____________________ tax is avoided in...

Question 6

When Gail dies,she owns 100% of the stock of an S corporation,with an adjusted basis of $10,000 and FMV of $100,000.The adjusted basis and FMV of the assets inside the S corporation are the same amounts as for Gail's stock.Gail's son Phil inherits all of the stock,but does not wish to continue the business.Therefore,the S corporation sells the assets,resulting in a $90,000 capital gain,and liquidates.Assuming that Phil is subject to a marginal tax rate of 30%,what taxes are due?

Accepted Answer

A) $0. 
B) $25,000. 
C) $27,000. 
D) $30,000. 
E) None of the above. 
A) $0. 
B) $25,000. 
C) $27,000. 
D) $30,000. 
E) None of the above.

Question 7

Outline the requirements that an entity must meet to elect S corporation status.

Accepted Answer

If each of the follo

Question 8

What statement is correct with respect to an S corporation?

Accepted Answer

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

Question 9

Yates Corporation elects S status,effective for calendar year 2010.Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1,2010.The asset is sold at the end of 2010 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. 
E) None of the above. 
A) $5,358. 
B) $12,642. 
C) $21,070. 
D) $35,718. 
E) None of the above.

Question 10

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

Accepted Answer

A) Taxable dividends. 
B) Stock dividend (taxable). 
C) Section 1250 gain. 
D) Tax-exempt income. 
E) None of the above. 
A) Taxable dividends. 
B) Stock dividend (taxable). 
C) Section 1250 gain. 
D) Tax-exempt income. 
E) None of the above.

Question 11

The termination of an S election occurs on the day after a corporation ceases to be a small business corporation.

Accepted Answer

A) True 
 B)False

Question 12

Distribution of appreciated property is taxable to an S corporation.

Accepted Answer

A) True 
 B)False

Question 13

The alternative minimum tax applies to an S corporation.

Accepted Answer

A) True 
 B)False

Question 14

Only 51% of the shareholders must consent to an S election.

Accepted Answer

A) True 
 B)False

Question 15

How large must total assets on Schedule L be at the end of the year for an S corporation to be required to file Schedule M-3?

Accepted Answer

A) $4 million. 
B) $5 million. 
C) $7.5 million. 
D) $10 million. 
E) Not required to file. 
A) $4 million. 
B) $5 million. 
C) $7.5 million. 
D) $10 million. 
E) Not required to file.

Question 16

During 2010,an S corporation in Flint,Michigan,has a recognized built-in gain of $81,200 and a recognized built-in loss of $10,000.It also holds an unexpired NOL from a C corporation year of $9,000,and it generates taxable income of $66,000.The built-in gain tax is,if any:

Accepted Answer

A) $0. 
B) $19,950. 
C) $22,750. 
D) $57,000. 
E) None of the above. 
A) $0. 
B) $19,950. 
C) $22,750. 
D) $57,000. 
E) None of the above.

Question 17

All tax preference items flow through the S corporation,to be included in the shareholders' AMT calculations.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Realized gain is ____________________ by an S corporation on its distribution of appreciated property.

Accepted Answer

The answer of Realized gain is ____________________ by an S...

Question 20

On January 1,2010,Kinney,Inc. ,an electing S corporation,has $4,000 of AEP and a balance of $10,000 in AAA.Kinney has two shareholders,Erin and Maine,each of whom owns 500 shares of Kinney's stock.Kinney's 2010 taxable income is $5,000.Kinney distributes $6,000 to each shareholder on February 1,2010,and distributes another $3,000 to each shareholder on September 1.How is Erin taxed on this distribution?

Accepted Answer

A) $500 dividend income. 
B) $1,000 dividend income. 
C) $1,500 dividend income. 
D) $3,000 dividend income. 
E) None of the above. 
A) $500 dividend income. 
B) $1,000 dividend income. 
C) $1,500 dividend income. 
D) $3,000 dividend income. 
E) None of the above.

Exam 22: S Corporations

An S corporation's AAA cannot have a negative balance.

Charitable contributions are subject to the 10% limitation at the S corporation level.

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

____________________ debt issued in an S corporation year is not treated as a second class of stock and does not disqualify the S election.

The corporate ____________________ tax is avoided in an S corporation.

Outline the requirements that an entity must meet to elect S corporation status.

What statement is correct with respect to an S corporation?

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

The termination of an S election occurs on the day after a corporation ceases to be a small business corporation.

Distribution of appreciated property is taxable to an S corporation.

The alternative minimum tax applies to an S corporation.

Only 51% of the shareholders must consent to an S election.

How large must total assets on Schedule L be at the end of the year for an S corporation to be required to file Schedule M-3?

During 2010,an S corporation in Flint,Michigan,has a recognized built-in gain of $81,200 and a recognized built-in loss of $10,000.It also holds an unexpired NOL from a C corporation year of $9,000,and it generates taxable income of $66,000.The built-in gain tax is,if any:

All tax preference items flow through the S corporation,to be included in the shareholders' AMT calculations.

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

Realized gain is ____________________ by an S corporation on its distribution of appreciated property.

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