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Exam 15: S Corporations

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Question 21

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An S corporation is subject to the following tax(es) .

A) Corporate income tax.
B) Built-in gains tax.
C) Alternative minimum tax.
D) None of these.

E) None of the above
F) A) and D)

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Question 22

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

A) Depletion deductions in excess of the basis of property.
B) Illegal kickbacks paid.
C) Nontaxable income.
D) Sales income.
E) A 20% QBI deduction.

F) A) and E)
G) A) and D)

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Question 23

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

This year, Jiang, 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? Ignore the 20% QBI deduction.

If a resident alien shareholder moves outside the United States, the S election is terminated.

The termination of an S election occurs on the day after a corporation ceases to be a qualifying S corporation.

If an S corporation has C corporation E & P and passive investment income in excess of % of its gross receipts for consecutive taxable years, the S election is terminated at the beginning of the year.

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.

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

Separately stated items are listed on Schedule of the Form 1120S.

Distributions of appreciated property by an S corporation are not taxable to the entity.

Lent Corporation converts to S corporation status in 2019.Lent had been using the LIFO inventory method and held a LIFO inventory value of $510,000 (FIFO value of $650,000) .How much tax must be added to the C corporation tax liability for the year before the S election in 2020?

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

Amit, Inc., an S corporation, holds an AAA balance of $614,000 at the beginning of the tax year.During the year, the following items occur. Amit's ending AAA balance is:

Mock Corporation converts to S corporation status in 2020.Mock used the LIFO inventory method in 2019 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 2019 corporate tax liability, assuming that Mock is subject to a 21% tax rate.

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

On January 1, Bobby and Alice equally own all of the stock of an electing S corporation called Prairie Dirt Delight. The entity incurs a $60,000 loss for a nonleap 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?

The choice of a flow-through entity for a closely held corporation often is between a(n) (a Federal tax entity) and a(n) (a state tax entity).

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:

An estate may be a shareholder of an S corporation.