Question 1

On January 2,2014,David loans his S corporation $10,000.By the end of 2014 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2015,the company's operating income is $10,000.The company makes 2015 distributions to David of $11,000.David reports a(n) :

Accepted Answer

A)  $1,000 LTCG.
B)  $3,000 LTCG.
C)  $11,000 LTCG.
D)  Loan basis of $10,000.E) A) and B)
F) C) and D)

Question 2

Which statement is incorrect?

Accepted Answer

A)  S corporations are treated as corporations under state law.
B)  S corporations are treated as partnerships for Federal income tax purposes.
C)  Distributions of appreciated property are taxable to the S corporation.
D)  None of the above statements is incorrect.E) A) and C)
F) A) and B)

Question 3

Which item is not included in an S corporation's nonseparately computed income?

Accepted Answer

A)  Net sales.
B)  Cost of goods sold.
C)  Dividends received.
D)  Depreciation recapture.E) B) and D)
F) A) and D)

Question 4

The Schedule M-3 is the same for a C corporation and an S corporation.

Accepted Answer

A) True 
 B)False

Question 5

Which tax provision does not apply to an S corporation?

Accepted Answer

A)  DPAD.
B)  Section 1244 stock.
C)  Penalty for failure to file.
D)  10% charitable contribution limitation.
E)  Estimated tax payments.F) A) and D)
G) A) and E)

Question 6

Which of these tax provisions does not apply to an S corporation?

Accepted Answer

A)  Section 1244 stock.
B)  "Partial liquidation" stock redemption.
C)  Tax-free "A" reorganization.
D)  Section 1202 capital gain exclusion.E) None of the above
F) A) and D)

Question 7

Pepper,Inc. ,an S corporation,holds a $1 million balance in accumulated E&P.It reports sales revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable,if any?

Accepted Answer

A)  $380,000.
B)  $185,000.
C)  $40,895.
D)  $0.
E)  Some other amount.F) All of the above
G) A) and D)

Question 8

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

Accepted Answer

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

Question 9

With respect to passive losses,there are three classes of income,losses,and credits: ____________________,____________________,and passive.

Accepted Answer

active,por...

Question 10

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

Accepted Answer

A) True 
 B)False

Question 11

____________________ husband and wife must consent to an S election if they own their stock jointly.

Accepted Answer

The answer of ____________________ husband and wife must consent to...

Question 12

Which item has no effect on an S corporation's AAA?

Accepted Answer

A)  Stock purchase by a shareholder.
B)  Interest expense.
C)  Cost of goods sold.
D)  Capital loss.
E)  All of the above modify AAA.F) B) and D)
G) A) and C)

Question 13

A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

Accepted Answer

A) True 
 B)False

Question 14

During 2015,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.On December 31,2014,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 will be $2,000.
C)  Nutt's ordinary income is $15,000.
D)  Nutt's tax-free return of capital is $11,000.
E)  None of the above.F) A) and B)
G) A) and E)

Question 15

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.F) C) and D)
G) C) and E)

Question 16

What statement is correct with respect to an S corporation?

Accepted Answer

A)  There are now more LLCs than S corporations.
B)  S corporation status allows shareholders immediately to realize tax benefits from corporate losses.
C)  An S corporation is prohibited from being a member of an affiliated group.
D)  An LLP may own stock in an S corporation.
E)  None of the above statements is correct.F) A) and B)
G) C) and E)

Exam 22: S Corporations

Which item has no effect on an S corporation's AAA?

Correct Answer
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Which tax provision does not apply to an S corporation?

Correct Answer
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Pepper,Inc. ,an S corporation,holds a $1 million balance in accumulated E&P.It reports sales revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable,if any?

Correct Answer
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Which item is not included in an S corporation's nonseparately computed income?

Correct Answer
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Realized gain is recognized by an S corporation on its distribution of ____________________ property.

Correct Answer
verified

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

Correct Answer
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During 2015,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.On December 31,2014,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?

Correct Answer
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A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

Correct Answer
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On January 2,2014,David loans his S corporation $10,000.By the end of 2014 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2015,the company's operating income is $10,000.The company makes 2015 distributions to David of $11,000.David reports a(n) :

Correct Answer
verified

____________________ husband and wife must consent to an S election if they own their stock jointly.

Correct Answer
verified

With respect to passive losses,there are three classes of income,losses,and credits: ,,and passive.

Correct Answer
verified
active,por...
View Answer

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

Correct Answer
verified

Which of these tax provisions does not apply to an S corporation?

Correct Answer
verified

What statement is correct with respect to an S corporation?

Correct Answer
verified

The Schedule M-3 is the same for a C corporation and an S corporation.

Correct Answer
verified

Which statement is incorrect?

Correct Answer
verified

Exam 22: S Corporations

Which item has no effect on an S corporation's AAA?

Correct AnswerverifiedShow Answer

Which tax provision does not apply to an S corporation?

Correct AnswerverifiedShow Answer

Pepper,Inc. ,an S corporation,holds a $1 million balance in accumulated E&P.It reports sales revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable,if any?

Correct AnswerverifiedShow Answer

Which item is not included in an S corporation's nonseparately computed income?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

During 2015,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.On December 31,2014,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?

Correct AnswerverifiedShow Answer

A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

Correct AnswerverifiedShow Answer

On January 2,2014,David loans his S corporation $10,000.By the end of 2014 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2015,the company's operating income is $10,000.The company makes 2015 distributions to David of $11,000.David reports a(n) :

Correct AnswerverifiedShow Answer

____________________ husband and wife must consent to an S election if they own their stock jointly.

Correct AnswerverifiedShow Answer

With respect to passive losses,there are three classes of income,losses,and credits: ____________________,____________________,and passive.

Correct Answerverifiedactive,por...View AnswerShow Answer

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

Correct AnswerverifiedShow Answer

Which of these tax provisions does not apply to an S corporation?

Correct AnswerverifiedShow Answer

What statement is correct with respect to an S corporation?

Correct AnswerverifiedShow Answer

The Schedule M-3 is the same for a C corporation and an S corporation.

Correct AnswerverifiedShow Answer

Which statement is incorrect?

Correct AnswerverifiedShow Answer

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With respect to passive losses,there are three classes of income,losses,and credits: ,,and passive.

Correct Answer
verified
active,por...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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