Question 1

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to the stock during a post-termination transition period of approximately one year is applied against and reduces the adjusted basis of the stock.

Accepted Answer

A) True 
 B)False

Question 2

When an S corporation liquidates, which of its tax attributes disappear?

Accepted Answer

A)  AAA.
B)  AEP.
C)  Suspended losses.
D)  All of the above items disappear.E) A) and B)
F) A) and C)

Question 3

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 4

Randall owns 800 shares in Fabrication, Inc., an S corporation in Moss Hill, Texas.In 2012, his basis in his stock is $30,000, before the adjustment for this year's losses.During 2012, Randall's share of the corporation's ordinary loss is $20,000 and his share of its capital loss is $15,000.How much can Randall deduct due to these losses?

Accepted Answer

A)  No deduction.
B)  $15,000 ordinary loss; $10,000 capital loss.
C)  $17,143 ordinary loss; $12,857 capital loss.
D)  $20,000 ordinary loss; $15,000 capital loss.E) B) and D)
F) B) and C)

Question 5

Which statement is incorrect about an S corporation?

Accepted Answer

A)  Nonresident aliens cannot own S corporation stock.
B)  A one-person LLC can be an S shareholder.
C)  A partnership can own S corporation stock.
D)  An S corporation can be a partner in a partnership.
E)  None of the above statements is incorrect.F) A) and D)
G) None of the above

Question 6

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.

Accepted Answer

A) True 
 B)False

Question 7

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) B) and E)
G) B) and C)

Question 8

Four unrelated individuals acquire assets on behalf of Jump Corporation on May 21, 2012, purchased assets on June 5, 2012, and begin doing business on June 15, 2012.They subscribe to shares of stock, file articles of incorporation for Jump, and become shareholders on July 23, 2012.The S election must be filed no later than 2 1/2 months after:

Accepted Answer

A)  May 21, 2012.
B)  June 5, 2012.
C)  June 15, 2012.
D)  July 23, 2012.
E)  December 31, 2012.F) B) and D)
G) D) and E)

Question 9

The § 1202 exclusion of gain is available on disposition of S corporation stock.

Accepted Answer

A) True 
 B)False

Question 10

How may an S corporation manage its liability for the built-in gains tax?

Accepted Answer

A taxable income limitation encourages a...

Question 11

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) B) and C)

Question 12

An S corporation can take advantage of the dividends received deduction.

Accepted Answer

A) True 
 B)False

Question 13

Distribution of loss property by an S corporation to a shareholder generally should be _________________.

Accepted Answer

The answer of Distribution of loss property by an S...

Question 14

Yates Corporation elects S status, effective for calendar year 2012.Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1, 2012.The asset is sold at the end of 2012 for $130,800.What amount must Mark Farris, a 60% owner and subject to a 15% income tax rate, pay, if any?

Accepted Answer

A)  $5,358.
B)  $12,642.
C)  $21,070.
D)  $35,718.E) A) and B)
F) A) and C)

Question 15

An S corporation can be a shareholder in another corporation.

Accepted Answer

A) True 
 B)False

Question 16

Grams, Inc., a calendar year S corporation, reports $20,000 DPGR and $15,000 of wages, and the S corporation's QPAI is $5,000.Janet has a 40% interest in the S corporation.All expenses that reduce DPGR are from wages, and all wages paid relate to DPGR.How much QPAI and wages are allocated to Janet?

Accepted Answer

A)  None.
B)  $2,000 and $6,000.
C)  $5,000 and $15,000.
D)  $5,000 and $20,000.E) A) and B)
F) None of the above

Question 17

The Section 179 expense deduction is a Schedule K item.

Accepted Answer

A) True 
 B)False

Question 18

During 2012, Rasic, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. On December 31, 2011, Rasic's stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. Calculate the amount and type of income that Rasic recognizes in 2012, assuming that there is no C corporation AEP.

Accepted Answer

$11,000 ordinary income; $15,000 return ...

Question 19

Depreciation recapture income is a Schedule K item.

Accepted Answer

A) True 
 B)False

Exam 22: S: Corporations

How may an S corporation manage its liability for the built-in gains tax?

Correct Answer
verified
A taxable income limitation encourages a...
View Answer

An S corporation can be a shareholder in another corporation.

Correct Answer
verified

Correct Answer
verified
$11,000 ordinary income; $15,000 return ...
View Answer

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

Correct Answer
verified

An S corporation can take advantage of the dividends received deduction.

Correct Answer
verified

The Section 179 expense deduction is a Schedule K item.

Correct Answer
verified

Depreciation recapture income is a Schedule K item.

Correct Answer
verified

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to the stock during a post-termination transition period of approximately one year is applied against and reduces the adjusted basis of the stock.

Correct Answer
verified

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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

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

Distribution of loss property by an S corporation to a shareholder generally should be _________________.

Correct Answer
verified

Which statement is incorrect about an S corporation?

Correct Answer
verified

Grams, Inc., a calendar year S corporation, reports $20,000 DPGR and $15,000 of wages, and the S corporation's QPAI is $5,000.Janet has a 40% interest in the S corporation.All expenses that reduce DPGR are from wages, and all wages paid relate to DPGR.How much QPAI and wages are allocated to Janet?

Correct Answer
verified

Correct Answer
verified

The § 1202 exclusion of gain is available on disposition of S corporation stock.

Correct Answer
verified

When an S corporation liquidates, which of its tax attributes disappear?

Correct Answer
verified

Exam 22: S: Corporations

How may an S corporation manage its liability for the built-in gains tax?

Correct AnswerverifiedA taxable income limitation encourages a...View AnswerShow Answer

An S corporation can be a shareholder in another corporation.

Correct AnswerverifiedShow Answer

Correct Answerverified$11,000 ordinary income; $15,000 return ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

An S corporation can take advantage of the dividends received deduction.

Correct AnswerverifiedShow Answer

The Section 179 expense deduction is a Schedule K item.

Correct AnswerverifiedShow Answer

Depreciation recapture income is a Schedule K item.

Correct AnswerverifiedShow Answer

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to the stock during a post-termination transition period of approximately one year is applied against and reduces the adjusted basis of the stock.

Correct AnswerverifiedShow Answer

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which statement is incorrect with respect to the number-of-shareholders test in 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

Distribution of loss property by an S corporation to a shareholder generally should be _________________.

Correct AnswerverifiedShow Answer

Which statement is incorrect about an S corporation?

Correct AnswerverifiedShow Answer

Grams, Inc., a calendar year S corporation, reports $20,000 DPGR and $15,000 of wages, and the S corporation's QPAI is $5,000.Janet has a 40% interest in the S corporation.All expenses that reduce DPGR are from wages, and all wages paid relate to DPGR.How much QPAI and wages are allocated to Janet?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The § 1202 exclusion of gain is available on disposition of S corporation stock.

Correct AnswerverifiedShow Answer

When an S corporation liquidates, which of its tax attributes disappear?

Correct AnswerverifiedShow Answer

Correct Answer
verified
A taxable income limitation encourages a...
View Answer

Correct Answer
verified

Correct Answer
verified
$11,000 ordinary income; $15,000 return ...
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
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