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Exam 12: S Corporations

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Question 71

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

A) True
B) False

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Question 72

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Post-termination distributions that are charged against OAA are received tax-free.

A) True
B) False

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Question 73

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

Depreciation recapture income is a ____________________ computed amount. nonseparately

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

Samantha owned 1,000 shares in Evita,Inc.,an S corporation,that uses the calendar year.On October 11,2013,Samantha sells all of her Evita stock.Her basis at the beginning of 2013 was $60,000.Her share of the corporate income for 2013 was $22,000,and she receives a distribution of $35,000 between January 1 and October 11,2013.Her stock basis at the time of the sale is:

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

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

The passive investment income of an S corporaton includes net capital gains from the sale of stocks and securities.

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

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

Discuss two ways that an S election may be terminated.

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

On January 2,2012,David loans his S corporation $10,000.By the end of 2012 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2013,the company's operating income is $10,000.The company makes 2013 distributions to David of $11,000.David reports a(n) :

Which of the following reduces a shareholder's S corporation stock basis?

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. reduced

The maximum number of shareholders in an S corporation is:

Individuals Adam and Bonnie form an S corporation,with Adam contributing cash of $100,000 for a 50% interest,and Bonnie contributing appreciated ordinary income property with an adjusted basis of $20,000 and a fair market value of $100,000. a. Determune Bonne's intial basis in her stock, assuming that she receives a 50% interest. b. The S corporation sells the property for $ 120,000. Determine Adam's and Bonnie's stock basis after the sale c. Determine Adam's and Bonnie's gain or loss if the company is liquidated.

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?

Yates Corporation elects S status,effective for calendar year 2013.Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1,2013.The asset is sold at the end of 2013 for $130,800.What amount must Mark Farris,a 60% owner and subject to a 15% income tax rate,pay,if any?