FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: S Corporations

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

A new S corporation shareholder can revoke the S election unilaterally, if he/she owns how much of the existing S corporation's stock?

A) More than 50%.
B) 50% or more.
C) The election can be revoked only if all of the shareholders consent.
D) The election cannot be revoked during the first year of the new shareholder's ownership.

E) A) and D)
F) B) and D)

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

What method is used to allocate S corporation income or losses (unless an election to the contrary is made) ?

A) Any method agreed to by all of the shareholders.
B) Per-day allocation.
C) FIFO method.
D) LIFO method.
E) Some other method.

F) A) and C)
G) B) and C)

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

Form 1120S provides an S shareholder's computation of his or her stock basis.

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

An S shareholder's basis is increased by stock purchases and capital contributions.

Mock Corporation converts to S corporation status in 2015. Mock used the LIFO inventory method in 2014 and had a LIFO inventory of $435,000 (FIFO value of $550,000) on the date of the S election. How much tax must be added to Mock's 2014 corporate tax liability, assuming that Mock is subject to a 35% tax rate.

An S corporation can claim a deduction for its NOL carryovers.

If an S corporation shareholder's basis in a loan to the entity has been _________________, the shareholder recognizes gross income when the S corporation repays the shareholder.

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

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

Four unrelated individuals acquire assets on behalf of Jump Corporation on May 21, 2015, purchased assets on June 5, 2015, and begin doing business on June 15, 2015. They subscribe to shares of stock, file articles of incorporation for Jump, and become shareholders on July 23, 2015. The S election must be filed no later than 2 1/2 months after:

Only 51% of the shareholders must consent to an S election.

Any distribution made by an S corporation during a tax year is taken into account before accounting for the year's losses.

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:

Non-separately computed loss ____________________ a S shareholder's stock basis.

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

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) :

The Section 179 expense deduction is a Schedule K item on the Form 1120S.

You are given the following facts about a solely owned S corporation. What is the shareholder's ending stock basis? ​

Grams, Inc., a calendar year S corporation is a manufacturer of widgets. Grams reports $20,000 DPGR and $15,000 of wages; its S corporation's QPAI is $5,000. Janet owns 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?