Question 1

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) B) and E)
G) A) and B)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

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

Question 4

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.E) A) and B)
F) A) and C)

Question 5

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 6

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 7

Some ____________________and taxation rules apply to an S corporation.

Accepted Answer

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Question 8

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

Accepted Answer

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

Question 9

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.E) All of the above
F) B) and C)

Question 10

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.E) All of the above
F) B) and C)

Question 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

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...

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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.F) B) and D)
G) A) and E)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

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 19

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

Accepted Answer

A) True 
 B)False

Question 20

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...

Exam 22: S Corporations

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

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

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

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

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

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

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

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

Correct AnswerverifiedShow Answer

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

Correct Answerverified$52,600 + $15,000 +....View AnswerShow Answer

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

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

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

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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?

Correct AnswerverifiedShow Answer

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.

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

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

Correct AnswerverifiedShow Answer

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.

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

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Some ____________________and taxation rules apply to an S corporation.

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

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$52,600 + $15,000 +....
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An S corporation's LIFO recapture amount equals the excess of the inventory's value under over the value.

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