Question 1

On January 1,Bobby and Alice own equally all of the stock of an electing S corporation called Prairie Dirt Delight.The entity incurs a $60,000 loss for a non-leap year.On the 200th day of the year (not a leap year) ,Bobby sells his one-half of the stock to his son,Saul.How much of the $60,000 loss,if any,is allocated to Bobby?

Accepted Answer

A)  $0
B)  $13,562
C)  $16,438
D)  $32,877E) A) and C)
F) A) and B)

Question 2

Kinney,Inc.,an electing S corporation,holds $5,000 of AEP and $9,000 in AAA at the beginning of the calendar tax year.Kinney has two shareholders,Eric and Maria,each of whom owns 500 shares of Kinney's stock.Kinney's taxable income is $6,000 for the year.Kinney distributes $6,000 to each shareholder on February 1,and it distributes another $3,000 to each shareholder on September 1.How is Eric taxed on the distribution?

Accepted Answer

A)  $500 dividend income.
B)  $1,000 dividend income.
C)  $1,500 dividend income.
D)  $3,000 dividend income.E) None of the above
F) A) and B)

Question 3

What statement is correct with respect to an S corporation?

Accepted Answer

A)  There is no advantage to elect § 1244 stock.
B)  An S corporation can own up to 85% of an insurance company.
C)  A resident alien may be a shareholder.
D)  A voting trust arrangement is not available.
E)  None of the above statements is true.F) A) and D)
G) A) and E)

Question 4

​Which type of distribution from an S corporation is taxed at ordinary income rates?

Accepted Answer

A)  ​AAA.
B)  ​PTI
C)  ​OAA
D)  ​AEP
E)  ​None of the above.F) B) and C)
G) C) and E)

Question 5

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 6

An S corporation's separately stated items generally are identical to those separately stated by _________________________.

Accepted Answer

The answer of An S corporation's separately stated items generally...

Question 7

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

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Accepted Answer

A) True 
 B)False

Question 10

​This year,Sammy Joseph,the sole shareholder of a calendar year S corporation,received a distribution of $17,000.On December 31 of the prior year,his stock basis was $3,000.The corporation earned $12,000 ordinary income during the year.It has no accumulated E&P.Which statement is correct?

Accepted Answer

A)  ​Joseph recognizes a $2,000 LTCG.
B)  ​Joseph's stock basis will be $2,000.
C)  ​Joseph's ordinary income is $15,000.
D)  ​Joseph's return of capital is $11,000.E) C) and D)
F) A) and D)

Question 11

Estella,Inc.,a calendar year S corporation,incurred the following items during the tax year.
​
  
Calculate Estella's nonseparately computed income.

Accepted Answer

The answer of Estella,Inc.,a calendar year S corporation,incurred the following...

Question 12

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) C) and D)
F) A) and C)

Question 13

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

Question 14

Discuss two ways that an S election may be terminated.

Accepted Answer

Broadly,there are two ways of terminatin...

Question 15

A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

Accepted Answer

A) True 
 B)False

Question 16

Some ____________________and ​ taxation rules apply to an S corporation.

Accepted Answer

partnershi...

Question 17

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity,but distributions do not reduce loan basis.

Accepted Answer

A) True 
 B)False

Question 18

Since loss property receives a ____________________ in basis without any loss recognition,S corporation distributions of loss property should be ____________________.

Accepted Answer

The answer of Since loss property receives a ____________________ in...

Question 19

Where the S corporation rules are silent,C corporation provisions apply.

Accepted Answer

A) True 
 B)False

Question 20

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

Accepted Answer

A) True 
 B)False

Exam 22: S Corporations

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

Correct Answer
verified

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

Correct Answer
verified

An S corporation's separately stated items generally are identical to those separately stated by _________________________.

Correct Answer
verified

What statement is correct with respect to an S corporation?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Which statement is incorrect?

Correct Answer
verified

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

Correct Answer
verified

This year,Sammy Joseph,the sole shareholder of a calendar year S corporation,received a distribution of $17,000.On December 31 of the prior year,his stock basis was $3,000.The corporation earned $12,000 ordinary income during the year.It has no accumulated E&P.Which statement is correct?

Correct Answer
verified

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity,but distributions do not reduce loan basis.

Correct Answer
verified

Some ____________________and taxation rules apply to an S corporation.

Correct Answer
verified
partnershi...
View Answer

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 type of distribution from an S corporation is taxed at ordinary income rates?

Correct Answer
verified

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

Correct Answer
verified

Discuss two ways that an S election may be terminated.

Correct Answer
verified
Broadly,there are two ways of terminatin...
View Answer

Where the S corporation rules are silent,C corporation provisions apply.

Correct Answer
verified

A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

Correct Answer
verified

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Correct Answer
verified

Since loss property receives a in basis without any loss recognition,S corporation distributions of loss property should be .

Correct Answer
verified

Exam 22: S Corporations

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

Correct AnswerverifiedShow Answer

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

Correct AnswerverifiedShow Answer

An S corporation's separately stated items generally are identical to those separately stated by _________________________.

Correct AnswerverifiedShow Answer

What statement is correct with respect to an S corporation?

Correct AnswerverifiedShow Answer

Estella,Inc.,a calendar year S corporation,incurred the following items during the tax year. ​ Calculate Estella's nonseparately computed income.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which statement is incorrect?

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

​This year,Sammy Joseph,the sole shareholder of a calendar year S corporation,received a distribution of $17,000.On December 31 of the prior year,his stock basis was $3,000.The corporation earned $12,000 ordinary income during the year.It has no accumulated E&P.Which statement is correct?

Correct AnswerverifiedShow Answer

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity,but distributions do not reduce loan basis.

Correct AnswerverifiedShow Answer

Some ____________________and ​ taxation rules apply to an S corporation.

Correct Answerverifiedpartnershi...View AnswerShow Answer

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 type of distribution from an S corporation is taxed at ordinary income rates?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Discuss two ways that an S election may be terminated.

Correct AnswerverifiedBroadly,there are two ways of terminatin...View AnswerShow Answer

Where the S corporation rules are silent,C corporation provisions apply.

Correct AnswerverifiedShow Answer

A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

Correct AnswerverifiedShow Answer

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Correct AnswerverifiedShow Answer

Since loss property receives a ____________________ in basis without any loss recognition,S corporation distributions of loss property should be ____________________.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

This year,Sammy Joseph,the sole shareholder of a calendar year S corporation,received a distribution of $17,000.On December 31 of the prior year,his stock basis was $3,000.The corporation earned $12,000 ordinary income during the year.It has no accumulated E&P.Which statement is correct?

Correct Answer
verified

Correct Answer
verified

Some ____________________and taxation rules apply to an S corporation.

Correct Answer
verified
partnershi...
View Answer

Correct Answer
verified

Correct Answer
verified

Which type of distribution from an S corporation is taxed at ordinary income rates?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Broadly,there are two ways of terminatin...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Since loss property receives a in basis without any loss recognition,S corporation distributions of loss property should be .

Correct Answer
verified