Question 1

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

Accepted Answer

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

Question 2

As with partnerships, the income, deductions, and tax credits of an S corporation to the shareholders annually.

Accepted Answer

The answer of As with partnerships, the income, deductions, and...

Question 3

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

Accepted Answer

A)   Husband Jaime and wife Maria count as one shareholder.
B)   Grandmother Adela and granddaughter Maria count as one shareholder.
C)   Husband Jaime and the estate of wife Maria count as one shareholder.
D)   Husband Jaime and ex-wife Isabel count as one shareholder.
E)   None of the above statements is incorrect.F) A) and E)
G) A) and C)

Question 4

Compensation for services rendered to an S corporation is subject to FICA taxes.

Accepted Answer

A) True 
 B)False

Question 5

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.

Accepted Answer

A) True 
 B)False

Question 6

An S shareholder's stock basis can be reduced below zero.

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

Advise your client how income, expenses, gain, and losses are allocated to shareholders of an S corporation.

Accepted Answer

In general, S corporation items are divi...

Question 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

It is not beneficial for an S corporation to issue § 1244 stock.

Accepted Answer

A) True 
 B)False

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

Question 13

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to S status on February 14. By the end of the year, $60,000 of these receivables are collected. Calculate any built-in gains tax, assuming that there is sufficient taxable income.

Accepted Answer

A)   $0
B)   $10,000
C)   $21,000
D)   $35,000
E)   Some other amountF) C) and D)
G) A) and E)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

Accepted Answer

A) True 
 B)False

Question 16

The passive investment income of an S corporation includes gains from the sale of securities.

Accepted Answer

A) True 
 B)False

Question 17

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) C) and D)
G) A) and B)

Question 18

Tax-exempt income is listed on Schedule of Form 1120S.

Accepted Answer

The answer of Tax-exempt income is listed on Schedule of...

Question 19

Fred is the sole shareholder of an S corporation in Fort Deposit, Alabama. At a time when his stock basis is $20,000, the corporation distributes appreciated property worth $100,000 (basis of $20,000) . Fred's taxable gain is:

Accepted Answer

A)   $0.
B)   $10,000.
C)   $80,000.
D)   $100,000.
E)   None of the above.F) B) and E)
G) A) and D)

Question 20

An S corporation with substantial AEP records operating revenues of $410,000, taxable interest income of $390,000, operating expenses of $260,000, and deductions attributable to the interest of $150,000. The passive income penalty tax payable, if any, is:

Accepted Answer

A)   $0.
B)   $40,923.
C)   $116,923.
D)   $136,500.E) A) and D)
F) B) and C)

Exam 12: S: Corporations

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

Correct AnswerverifiedShow Answer

Advise your client how income, expenses, gain, and losses are allocated to shareholders of an S corporation.

Correct AnswerverifiedIn general, S corporation items are divi...View AnswerShow Answer

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

Correct AnswerverifiedShow Answer

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.

Correct AnswerverifiedShow Answer

Tax-exempt income is listed on Schedule of Form 1120S.

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

The passive investment income of an S corporation includes gains from the sale of securities.

Correct AnswerverifiedShow Answer

An S shareholder's stock basis can be reduced below zero.

Correct AnswerverifiedShow Answer

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

It is not beneficial for an S corporation to issue § 1244 stock.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Compensation for services rendered to an S corporation is subject to FICA taxes.

Correct AnswerverifiedShow Answer

Fred is the sole shareholder of an S corporation in Fort Deposit, Alabama. At a time when his stock basis is $20,000, the corporation distributes appreciated property worth $100,000 (basis of $20,000) . Fred's taxable gain is:

Correct AnswerverifiedShow Answer

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to S status on February 14. By the end of the year, $60,000 of these receivables are collected. Calculate any built-in gains tax, assuming that there is sufficient taxable income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As with partnerships, the income, deductions, and tax credits of an S corporation to the shareholders annually.

Correct AnswerverifiedShow Answer

An S corporation with substantial AEP records operating revenues of $410,000, taxable interest income of $390,000, operating expenses of $260,000, and deductions attributable to the interest of $150,000. The passive income penalty tax payable, if any, is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
In general, S corporation items are divi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified