Question 1

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) D) and E)
G) C) and D)

Question 2

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

Question 3

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) C) and D)
F) B) and D)

Question 4

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 C)
G) A) and D)

Question 5

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 6

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

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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) None of the above
F) C) and D)

Question 9

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

Accepted Answer

active,por...

Question 10

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) None of the above
F) All of the above

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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 13

____________________ 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 14

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 D)
F) A) and B)

Question 15

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 E)
G) A) and B)

Question 16

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 C)

Exam 22: S Corporations

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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
verified

Which tax provision does not apply 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

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

Correct Answer
verified

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

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

Which statement is incorrect?

Correct Answer
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What statement is correct with respect to an S corporation?

Correct Answer
verified

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
verified

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

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

Exam 22: S Corporations

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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 tax provision does not apply 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

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

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

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

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

Which statement is incorrect?

Correct AnswerverifiedShow Answer

What statement is correct with respect to an S corporation?

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

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

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

Correct Answer
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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