Question 1

Which of the following items is not separately stated for an S corporation?

Accepted Answer

A)  short-term capital gain 
B)  dividend income 
C)  Section 1245 income 
D)  charitable contribution

Question 2

Troy owns 50% of Dot.Com, an e-commerce company. His S corporation stock basis at the beginning of the year is $300,000. Dot.Com has not done well this year and will report an ordinary loss of $875,000. Troy's marginal tax rate for the current year is 35%. What tax issues should Troy consider with respect to the loss?

Accepted Answer

The answer of Troy owns 50% of Dot.Com, an e-commerce...

Question 3

Identify which of the following statements is true.

Accepted Answer

A)  Beach Corporation, an S corporation, has gross receipts of $240,000; taxable income of $120,000; passive investment income of $100,000; and expenses directly attributable to the passive investment income of $20,000. The corporation's excess net passive income is $32,000. 
B)  The built-in gains tax applicable to S corporations can be avoided if the property is held for ten years. 
C)  An S corporation generally will not owe the built-in gains tax if the corporation has never been a C corporation. 
D)  All of the above are true.

Question 4

All shareholders must consent to the revocation of S status.

Accepted Answer

A) True 
 B)False

Question 5

On June 30 of the current year, the S election of Great Corporation is terminated, thus creating a six-month S short year and a six-month C short year. Great Corporation is a calendar-year taxpayer. The S short-year return is due

Accepted Answer

A)  September 15. 
B)  December 15. 
C)  March 15 of the next year. 
D)  June 30 of the next year.

Question 6

Chuck Corporation reports the following results for this year:
Service (nonpassive) income $17,500
Dividend income 18,500
Interest income 14,000
Passive income-related expenses 5,000
Other expenses 12,500
At the end of this year, Chuck's E&P for its C corporation tax years amount to $30,000. Compute Chuck Corporation's excess net passive income.

Accepted Answer

The answer of Chuck Corporation reports the following results for...

Question 7

Alligood Corporation has two classes of common stock outstanding. The Class A and Class B common stock give the shareholders identical rights and interests in the profits and assets of the corporation. Class A stock has one vote per share. Class B stock is nonvoting. Alligood Corporation may

Accepted Answer

A)  not make the S election due to different voting rights. 
B)  make the S election once the Class B is retired. 
C)  make the S election at any time. 
D)  not make the S election due to two classes of stock.

Question 8

Zinc Corporation is created in the current year and promptly makes an S election. How much passive income can it earn this year without fear of losing its S corporation status or being subject to the Sec. 1375 tax on excess net passive income?

Accepted Answer

The answer of Zinc Corporation is created in the current...

Question 9

Identify which of the following statements is true.

Accepted Answer

A)  Shareholders who acquire stock in an S corporation after the election date and prior to the election's effective date must consent to the election. 
B)  S corporation consent by shareholders is binding on the current tax year and all future tax years. 
C)  Only shareholders who own stock on the date an S election takes effect must consent to the election. 
D)  All of the above are false.

Question 10

Identify which of the following statements is true.

Accepted Answer

A)  A partnership can be an S corporation shareholder. 
B)  A nonresident alien can be an S corporation shareholder. 
C)  An S corporation can have more than 100 shareholders, since families are treated as a single shareholder. 
D)  All of the above are false.

Question 11

Which of the following corporate tax levies are imposed on an S corporation?

Accepted Answer

A)  corporate income tax 
B)  corporate alternative minimum tax 
C)  accumulated earnings tax 
D)  None of these taxes are imposed on an S corporation.

Question 12

Can loss or credit carryforwards from a previous C corporation tax year help reduce the built-in gains tax?

Accepted Answer

The answer of Can loss or credit carryforwards from a...

Question 13

Identify which of the following statements is true.

Accepted Answer

A)  An S corporation should have a buy-sell agreement to guard itself against an ill-advised sale of its stock. 
B)  The terms "small business corporation" and "S corporation" are synonymous. 
C)  A regular corporation has common and preferred stock outstanding on January 1. On January 2, the preferred stock is canceled in a recapitalization, leaving only common stock outstanding. The corporation can make an S election for this tax year. 
D)  All of the above are false.

Question 14

An S corporation is permitted an automatic extension of time for filing its tax return. The automatic extension period is

Accepted Answer

A)  one month. 
B)  two months. 
C)  three months. 
D)  six months.

Question 15

A corporation must make an S election for the current year after March 15 in the case of a calendar-year corporation.

Accepted Answer

A) True 
 B)False

Question 16

A C corporation was formed five years ago and is a fiscal-year taxpayer with a June 30 year-end. The C corporation wants to make an S election for its tax year beginning in the current year. The election must be made by ________ (assuming permission can be obtained to continue using the fiscal year from the IRS).

Accepted Answer

A)  June 30 of the current year 
B)  September 15 of the current year 
C)  June 30 of the next year 
D)  September 15 of the next year

Question 17

Identify which of the following statements is true.

Accepted Answer

A)  An S corporation cannot own any stock of another corporation. 
B)  An S corporation cannot own 100% of the stock of another S corporation. 
C)  An S corporation that owns all of the stock of a Qualified Subchapter S Subsidiary (QSub) must report all the income, deductions, and losses of the subsidiary on its own tax return. 
D)  All of the above are true.

Question 18

April Corporation's Subchapter S election was voluntarily terminated for 2015. The first year that April would be eligible to reelect S corporation status is

Accepted Answer

A)  2016. 
B)  2017. 
C)  2018. 
D)  2020.

Question 19

An S corporation reports ordinary income of $120,000 after deducting $20,000 for Fred's salary. Fred and his three children own the S corporation equally. The IRS determines Fred's stock transfer to his three children is not bona fide. Reasonable compensation for Fred is $40,000. How much of the S corporation's $140,000 pre-salary income must be reported by Fred?

Accepted Answer

A)  $140,000 
B)  $100,000 
C)  $50,000 
D)  $40,000

Question 20

What is a permitted year?

Accepted Answer

The answer of What is a permitted year?...

Exam 11: S Corporations

Which of the following items is not separately stated for an S corporation?

Identify which of the following statements is true.

All shareholders must consent to the revocation of S status.

On June 30 of the current year, the S election of Great Corporation is terminated, thus creating a six-month S short year and a six-month C short year. Great Corporation is a calendar-year taxpayer. The S short-year return is due

Alligood Corporation has two classes of common stock outstanding. The Class A and Class B common stock give the shareholders identical rights and interests in the profits and assets of the corporation. Class A stock has one vote per share. Class B stock is nonvoting. Alligood Corporation may

Zinc Corporation is created in the current year and promptly makes an S election. How much passive income can it earn this year without fear of losing its S corporation status or being subject to the Sec. 1375 tax on excess net passive income?

Identify which of the following statements is true.

Identify which of the following statements is true.

Which of the following corporate tax levies are imposed on an S corporation?

Can loss or credit carryforwards from a previous C corporation tax year help reduce the built-in gains tax?

Identify which of the following statements is true.

An S corporation is permitted an automatic extension of time for filing its tax return. The automatic extension period is

A corporation must make an S election for the current year after March 15 in the case of a calendar-year corporation.

Identify which of the following statements is true.

April Corporation's Subchapter S election was voluntarily terminated for 2015. The first year that April would be eligible to reelect S corporation status is

What is a permitted year?