Question 1

For a new corporation,a premature S election may not be effective.

Accepted Answer

A) True 
 B)False

Question 2

S corporation provides many of the benefits of ____________________ taxation and at the same time gives the owners ____________________ protection from creditors.

Accepted Answer

partnershi

Question 3

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

Accepted Answer

A) A resident alien. 
B) Partnership. 
C) A foreign corporation. 
D) A nonqualifying trust. 
E) None of the above can own stock. 
A) A resident alien. 
B) Partnership. 
C) A foreign corporation. 
D) A nonqualifying trust. 
E) None of the above can own stock.

Question 4

Shareholders may deduct losses in excess of the basis in S corporation stock when shareholder does not have a loan basis.

Accepted Answer

A) True 
 B)False

Question 5

All items (e.g. ,income,losses)are allocated to each shareholder based upon ____________________ ownership throughout the year.

Accepted Answer

The answer of All items (e.g. ,income,losses)are allocated to each...

Question 6

On January 1,Bobby and Alice own equally all of the stock of an electing S corporation called Prairie Dirt Delight.The soil company has a $90,000 loss for a non-leap year.On the 219th day of the year,Bobby sells his one-half of the stock to his son,Naresh.How much of the $90,000 loss is allocated to Alice?

Accepted Answer

A) $0. 
B) $18,000. 
C) $27,000. 
D) $45,000. 
E) None of the above. 
A) $0. 
B) $18,000. 
C) $27,000. 
D) $45,000. 
E) None of the above.

Question 7

Explain the OAA concept in S corporation taxation.

Accepted Answer

Schedule M-2 contains a column labeled O

Question 8

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

Accepted Answer

The major difference involves distributi

Question 9

If the beginning balance in OAA is $3,900,and the following transactions occur,what is the ending OAA balance?

Accepted Answer

A) $1,100. 
B) $6,400. 
C) $53,600. 
D) $56,400. 
E) None of the above. 
A) $1,100. 
B) $6,400. 
C) $53,600. 
D) $56,400. 
E) None of the above.

Question 10

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

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 resemble partnerships under the Federal income tax law. 
C) The alternative minimum tax applies to some S corporations. 
D) An S corporation may not allocate income and deduction items to specific shareholders,like a partnership does. 
E) None of the above. 
A) S corporations are treated as corporations under state law. 
B) S corporations resemble partnerships under the Federal income tax law. 
C) The alternative minimum tax applies to some S corporations. 
D) An S corporation may not allocate income and deduction items to specific shareholders,like a partnership does. 
E) None of the above.

Question 12

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

Accepted Answer

A) True 
 B)False

Question 13

Non-separately computed loss ____________________ a S shareholder's stock basis.

Accepted Answer

The answer of Non-separately computed loss ____________________ a S shareholder's...

Question 14

In the case of a complete termination of an S corporation interest,a ____________________ tax year may occur.

Accepted Answer

The answer of In the case of a complete termination...

Question 15

Estela,Inc. ,a calendar year S corporation,incurred the following items in 2010.
   Calculate Estela's nonseparately computed income.

Accepted Answer

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

Question 16

Most IRAs can own stock in an S corporation.

Accepted Answer

A) True 
 B)False

Question 17

An S election made before becoming a corporation is valid the next 22-month tax year.

Accepted Answer

A) True 
 B)False

Question 18

Identify a disadvantage of an S corporation.

Accepted Answer

A) Generally,trusts cannot be shareholders. 
B) Losses flow through to the shareholders. 
C) The AMT on corporations is avoided. 
D) Tax-exempt income flows through to the shareholders. 
E) None of the above is a disadvantage of the S election. 
A) Generally,trusts cannot be shareholders. 
B) Losses flow through to the shareholders. 
C) The AMT on corporations is avoided. 
D) Tax-exempt income flows through to the shareholders. 
E) None of the above is a disadvantage of the S election.

Question 19

Crew Corporation elects S status effective for tax year 2010.As of January 1,2010,Crew's assets were appraised as follows.
   In each of the following situations,calculate any built-in gains tax,assuming that the highest corporate tax rate is 35%.C corporation taxable income would have been $100,000.

Accepted Answer

The answer of Crew Corporation elects S status effective for...

Question 20

A cash basis calendar year C corporation in Athens,Georgia,has $100,000 of accounts receivable on the date of its conversion to an S corporation on February 14.By the end of the year,$70,000 of these receivables are collected.Calculate any built-in gains tax,assuming that there is sufficient taxable income.

Accepted Answer

A) $0. 
B) $10,500. 
C) $24,500. 
D) $35,000. 
E) Some other amount. 
A) $0. 
B) $10,500. 
C) $24,500. 
D) $35,000. 
E) Some other amount.

Exam 22: S Corporations

For a new corporation,a premature S election may not be effective.

S corporation provides many of the benefits of ____________________ taxation and at the same time gives the owners ____________________ protection from creditors.

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

Shareholders may deduct losses in excess of the basis in S corporation stock when shareholder does not have a loan basis.

All items (e.g. ,income,losses)are allocated to each shareholder based upon ____________________ ownership throughout the year.

Explain the OAA concept in S corporation taxation.

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

If the beginning balance in OAA is $3,900,and the following transactions occur,what is the ending OAA balance?

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

Which statement is incorrect?

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

Non-separately computed loss ____________________ a S shareholder's stock basis.

In the case of a complete termination of an S corporation interest,a ____________________ tax year may occur.

Estela,Inc. ,a calendar year S corporation,incurred the following items in 2010. Calculate Estela's nonseparately computed income.

Most IRAs can own stock in an S corporation.

An S election made before becoming a corporation is valid the next 22-month tax year.

Identify a disadvantage of an S corporation.

Crew Corporation elects S status effective for tax year 2010.As of January 1,2010,Crew's assets were appraised as follows. In each of the following situations,calculate any built-in gains tax,assuming that the highest corporate tax rate is 35%.C corporation taxable income would have been $100,000.

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

S corporation provides many of the benefits of taxation and at the same time gives the owners protection from creditors.