Question 1

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

Accepted Answer

A)  A partnership.
B)  A nonresident alien.
C)  A voting trust.
D)  The estate of a deceased shareholder.E) A) and B)
F) B) and C)

Question 2

You are given the following facts about a solely owned S corporation.What is the shareholder's ending stock basis?

Accepted Answer

A)  $61,800.
B)  $68,100.
C)  $99,100.
D)  $100,100.
E)  Some other amount.F) B) and C)
G) A) and E)

Question 3

Most limited liability partnerships can own stock in an S corporation.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

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

Question 5

Depreciation recapture income is a Schedule K item on the Form 1120S.

Accepted Answer

A) True 
 B)False

Question 6

On January 1,2014,Kinney,Inc.,an electing S corporation,holds $5,000 of AEP and $9,000 in AAA.Kinney has two shareholders,Eric and Maria,each of whom owns 500 shares of Kinney's stock.Kinney's 2014 taxable income is $6,000.Kinney distributes $6,000 to each shareholder on February 1,2014,and distributes another $3,000 to each shareholder on September 1.How is Erin taxed on the 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.F) A) and C)
G) A) and E)

Question 7

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Accepted Answer

A) True 
 B)False

Question 8

On January 2,2012,Tim loans his S corporation $10,000.By the end of 2012,Tim's stock basis is zero,and the basis in his note has been reduced to $8,000.During 2013,the company's operating income is $10,000.The company makes 2013 distributions to Tim of $8,000.Tim reports a(n) :

Accepted Answer

A)  $2,000 LTCG.
B)  $8,000 LTCG.
C)  Stock basis of $2,000.
D)  Loan basis of $10,000.E) All of the above
F) None of the above

Question 9

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

Accepted Answer

A) True 
 B)False

Question 10

A new S corporation shareholder can revoke the S election unilaterally,if he/she owns how much of the existing S corporation's stock?

Accepted Answer

A)  More than 50%.
B)  50% or more.
C)  The election can be revoked only if all of the shareholders consent.
D)  The election cannot be revoked during the first year of the new shareholder's ownership.E) None of the above
F) A) and B)

Question 11

Which statement is correct with respect to filing an S election?

Accepted Answer

A)  Form 2553 must be filed.
B)  All shareholders must consent.
C)  The election may be filed in the previous year.
D)  An extension of time is available for filing Form 2553.
E)  All of the above statements are correct.F) B) and E)
G) C) and D)

Question 12

Stock basis first is increased by income items,then ____________________ by distributions,and finally decreased by ____________________.
decreased,losses

Accepted Answer

The answer of Stock basis first is increased by income...

Question 13

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

Accepted Answer

A)  A consent extension is available only if Form 2553 is filed on a timely basis,reasonable cause is given,and the interests of the government are not jeopardized.
B)  Both husband and wife must consent if one owns the stock as community property.
C)  An S election requires a consent from all of the S corporation's shareholders.
D)  A consent must be in writing.
E)  None of the above statements is incorrect.F) B) and E)
G) A) and E)

Question 14

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 15

Your client is a C corporation that would like to convert to S status.Advise this corporation with respect to minimizing any built-in gains tax.

Accepted Answer

The C corporation should obtain sound ap...

Question 16

The choice of a flow-through entity for a closely-held corporation often is between a(n)____________________ (a Federal tax entity)and a(n)____________________ (a state tax entity).
S corporation,limited liability company

Accepted Answer

S corporat...

Question 17

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

Accepted Answer

A) True 
 B)False

Question 18

Distributions of appreciated property by an S corporation are not taxable to the entity.

Accepted Answer

A) True 
 B)False

Question 19

During 2013,Oxen Corporation incurs the following transactions.  Oxen maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder,Megan.As a result,Megan must recognize:

Accepted Answer

A)  Ordinary income of $103,000.
B)  Ordinary income of $103,000 and long-term capital gain of $5,000.
C)  Ordinary income of $103,000,long-term capital gain of $10,000,and $4,000 short-term capital loss.
D)  Ordinary income of $109,000.E) A) and D)
F) None of the above

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 12: S Corporations

You are given the following facts about a solely owned S corporation.What is the shareholder's ending stock basis?

Correct Answer
verified

The choice of a flow-through entity for a closely-held corporation often is between a(n) (a Federal tax entity)and a(n) (a state tax entity). S corporation,limited liability company

Correct Answer
verified
S corporat...
View Answer

Which statement is correct with respect to filing an S election?

Correct Answer
verified

Stock basis first is increased by income items,then by distributions,and finally decreased by . decreased,losses

Correct Answer
verified

Depreciation recapture income is a Schedule K item on the Form 1120S.

Correct Answer
verified

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

Correct Answer
verified

During 2013,Oxen Corporation incurs the following transactions. Oxen maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder,Megan.As a result,Megan must recognize:

Correct Answer
verified

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified

Distributions of appreciated property by an S corporation are not taxable to the entity.

Correct Answer
verified

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

Correct Answer
verified

A new S corporation shareholder can revoke the S election unilaterally,if he/she owns how much of the existing S corporation's stock?

Correct Answer
verified

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

Correct Answer
verified

Most limited liability partnerships can own stock in an S corporation.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Correct Answer
verified

Your client is a C corporation that would like to convert to S status.Advise this corporation with respect to minimizing any built-in gains tax.

Correct Answer
verified
The C corporation should obtain sound ap...
View Answer

On January 2,2012,Tim loans his S corporation $10,000.By the end of 2012,Tim's stock basis is zero,and the basis in his note has been reduced to $8,000.During 2013,the company's operating income is $10,000.The company makes 2013 distributions to Tim of $8,000.Tim reports a(n) :

Correct Answer
verified

Exam 12: S Corporations

You are given the following facts about a solely owned S corporation.What is the shareholder's ending stock basis?

Correct AnswerverifiedShow Answer

The choice of a flow-through entity for a closely-held corporation often is between a(n)____________________ (a Federal tax entity)and a(n)____________________ (a state tax entity). S corporation,limited liability company

Correct AnswerverifiedS corporat...View AnswerShow Answer

Which statement is correct with respect to filing an S election?

Correct AnswerverifiedShow Answer

Stock basis first is increased by income items,then ____________________ by distributions,and finally decreased by ____________________. decreased,losses

Correct AnswerverifiedShow Answer

Depreciation recapture income is a Schedule K item on the Form 1120S.

Correct AnswerverifiedShow Answer

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

Correct AnswerverifiedShow Answer

During 2013,Oxen Corporation incurs the following transactions. Oxen maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder,Megan.As a result,Megan must recognize:

Correct AnswerverifiedShow Answer

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Distributions of appreciated property by an S corporation are not taxable to the entity.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A new S corporation shareholder can revoke the S election unilaterally,if he/she owns how much of the existing S corporation's stock?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Most limited liability partnerships can own stock in an S corporation.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Correct AnswerverifiedShow Answer

Your client is a C corporation that would like to convert to S status.Advise this corporation with respect to minimizing any built-in gains tax.

Correct AnswerverifiedThe C corporation should obtain sound ap...View AnswerShow Answer

On January 2,2012,Tim loans his S corporation $10,000.By the end of 2012,Tim's stock basis is zero,and the basis in his note has been reduced to $8,000.During 2013,the company's operating income is $10,000.The company makes 2013 distributions to Tim of $8,000.Tim reports a(n) :

Correct AnswerverifiedShow Answer

Correct Answer
verified

The choice of a flow-through entity for a closely-held corporation often is between a(n) (a Federal tax entity)and a(n) (a state tax entity). S corporation,limited liability company

Correct Answer
verified
S corporat...
View Answer

Correct Answer
verified

Stock basis first is increased by income items,then by distributions,and finally decreased by . decreased,losses

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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The C corporation should obtain sound ap...
View Answer

Correct Answer
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