Question 1

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

Accepted Answer

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

Question 2

Some ____________________and taxation rules apply to an S corporation.

Accepted Answer

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Question 3

An S corporation recognizes a ________________ on any distribution of appreciated property.

Accepted Answer

The answer of An S corporation recognizes a ________________ on...

Question 4

A capital loss allocated to a shareholder always reduces the Other Adjustments Account.

Accepted Answer

A) True 
 B)False

Question 5

Claude Bergeron sold 1,000 shares of Ditta, Inc., an S corporation, for $12,000. He had owned the stock for three years and had a stock basis of $111,000 in the shares. Claude is single, and he is the original owner of the § 1244 stock shares. Calculate the appropriate tax treatment.

Accepted Answer

A)  No gain or loss. 
B)  $50,000 LTCL? $49,000 ordinary deduction. 
C)  $50,000 ordinary deduction? $49,000 LTCL. 
D)  $99,000 long-term capital loss. 
A)  No gain or loss. 
B)  $50,000 LTCL? $49,000 ordinary deduction. 
C)  $50,000 ordinary deduction? $49,000 LTCL. 
D)  $99,000 long-term capital loss.

Question 6

Tax-exempt income at the corporate level flows through as exempt to S shareholders.

Accepted Answer

A) True 
 B)False

Question 7

A service-type S corporation shareholder cannot claim the 20% QBI deduction.

Accepted Answer

A) True 
 B)False

Question 8

An S shareholder who dies during the S corporation tax year must report his or her share of the pro rata income (loss) items up to the date of death, on the final individual tax return.

Accepted Answer

A) True 
 B)False

Question 9

An S corporation shareholder's stock basis includes his or her direct investments plus a ratable share of any corporate liabilities.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

The answer of Bidden, Inc., a calendar year S corporation,...

Question 11

If any entity electing S status is currently a C corporation, NOL carryovers from prior years generally_________________ be used in an S corporation year.

Accepted Answer

The answer of If any entity electing S status is...

Question 12

Which, if any, of the following items decreases an S corporation's AAA?

Accepted Answer

A)  Section 1231 loss. 
B)  Expenses related to tax-exempt income. 
C)  Depletion in excess of basis. 
D)  Distribution from earnings and profits. 
E)  None of the above affects the AAA. 
A)  Section 1231 loss. 
B)  Expenses related to tax-exempt income. 
C)  Depletion in excess of basis. 
D)  Distribution from earnings and profits. 
E)  None of the above affects the AAA.

Question 13

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 14

During the year, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. At the end of last year, his 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 is $2,000. 
C)  Nutt's ordinary income is $15,000. 
D)  Nutt's tax-free return of capital is $11,000. 
A)  Nutt recognizes a $1,000 LTCG. 
B)  Nutt's stock basis is $2,000. 
C)  Nutt's ordinary income is $15,000. 
D)  Nutt's tax-free return of capital is $11,000.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Gene Grams is a 45% owner of a calendar year S corporation during the tax year. His beginning stock basis is $230,000, and the S corporation reports the following items.
   
Calculate Grams's stock basis at year-end.

Accepted Answer

The answer of Gene Grams is a 45% owner of...

Question 17

An S election is made on the shareholder's Form 2553.

Accepted Answer

A) True 
 B)False

Question 18

Which statement is incorrect with respect to an S shareholder's consent?

Accepted Answer

A)  Both husband and wife must consent if one owns the stock as community property. 
B)  An S election requires a consent from all of the S corporation's shareholders. 
C)  A consent must be in writing. 
D)  None of the above statements is incorrect. 
A)  Both husband and wife must consent if one owns the stock as community property. 
B)  An S election requires a consent from all of the S corporation's shareholders. 
C)  A consent must be in writing. 
D)  None of the above statements is incorrect.

Question 19

The maximum number of actual shareholders in an S corporation is:

Accepted Answer

A)  75. 
B)  100. 
C)  200. 
D)  Some other number. 
E)  Indeterminable. 
A)  75. 
B)  100. 
C)  200. 
D)  Some other number. 
E)  Indeterminable.

Question 20

An S corporation's LIFO recapture amount equals the excess of the inventory's value under____________________ over the ____________________ value.

Accepted Answer

The answer of An S corporation's LIFO recapture amount equals...

Exam 22: S Corporations

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

Some ____________________and taxation rules apply to an S corporation.

An S corporation recognizes a ________________ on any distribution of appreciated property.

A capital loss allocated to a shareholder always reduces the Other Adjustments Account.

Claude Bergeron sold 1,000 shares of Ditta, Inc., an S corporation, for $12,000. He had owned the stock for three years and had a stock basis of $111,000 in the shares. Claude is single, and he is the original owner of the § 1244 stock shares. Calculate the appropriate tax treatment.

Tax-exempt income at the corporate level flows through as exempt to S shareholders.

A service-type S corporation shareholder cannot claim the 20% QBI deduction.

An S shareholder who dies during the S corporation tax year must report his or her share of the pro rata income (loss) items up to the date of death, on the final individual tax return.

An S corporation shareholder's stock basis includes his or her direct investments plus a ratable share of any corporate liabilities.

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

If any entity electing S status is currently a C corporation, NOL carryovers from prior years generally_________________ be used in an S corporation year.

Which, if any, of the following items decreases an S corporation's AAA?

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

During the year, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. At the end of last year, his 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?

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

Gene Grams is a 45% owner of a calendar year S corporation during the tax year. His beginning stock basis is $230,000, and the S corporation reports the following items. Calculate Grams's stock basis at year-end.

An S election is made on the shareholder's Form 2553.

Which statement is incorrect with respect to an S shareholder's consent?

The maximum number of actual shareholders in an S corporation is:

An S corporation's LIFO recapture amount equals the excess of the inventory's value under____________________ over the ____________________ value.

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, Section 1231, and Recapture Provisions

Taxing Business Income

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 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

An S corporation's LIFO recapture amount equals the excess of the inventory's value under over the value.