Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

Accepted Answer

A) True 
 B)False

Question 3

An S corporation must possess which of the following characteristics?

Accepted Answer

A)  Not more than one hundred shareholders.
B)  Corporation organized in the U.S.
C)  Only one class of stock.
D)  All of the above are required of an S corporation.
E)  None of the above are required of an S corporation.F) A) and B)
G) A) and C)

Question 4

Compare the distribution of property rules for an S corporation with the corresponding partnership rules.

Accepted Answer

The major difference involves distributi...

Question 5

A distribution from OAA is taxable.

Accepted Answer

A) True 
 B)False

Question 6

​Lent Corporation converts to S corporation status for this year.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,assuming that Lent is subject to a 35% tax rate.

Accepted Answer

A)  ​$0.
B)  ​$12,250.
C)  ​$49,000.
D)  ​$140,000.E) All of the above
F) A) and B)

Question 7

Which,if any,of the following items decreases an S corporation's AAA?

Accepted Answer

A)  Section 1231 loss.
B)  Expenses related to tax-exempt income.
C)  Depletion in excess of basis.
D)  Distribution from earnings and profits.
E)  None of the above affects the AAA.F) B) and D)
G) B) and E)

Question 8

Most limited liability partnerships can own stock in an S corporation.

Accepted Answer

A) True 
 B)False

Question 9

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

Accepted Answer

A) True 
 B)False

Question 10

Which item does not appear on Schedule K of Form 1120S?

Accepted Answer

A)  Tax-exempt interest income.
B)  Section 1231 gain.
C)  Section 179 depreciation deduction.
D)  Depreciation recapture income.
E)  All of the above appear on Schedule K.F) A) and C)
G) C) and D)

Question 11

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

Accepted Answer

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

Question 12

During the year,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.At the end of last year,his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

Accepted Answer

A)  Nutt recognizes a $1,000 LTCG.
B)  Nutt's stock basis is $2,000.
C)  Nutt's ordinary income is $15,000.
D)  Nutt's tax-free return of capital is $11,000.E) A) and D)
F) A) and C)

Question 13

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:

Accepted Answer

A)  $1,055,620.
B)  $1,185,150.
C)  $1,191,150.
D)  $1,242,150.
E)  Some other amount.F) A) and E)
G) All of the above

Question 14

Yates Corporation elects S status,effective for current calendar tax year.Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1.The asset is sold at the end of the year 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)  $35,718E) A) and B)
F) A) and C)

Question 15

The maximum number of actual shareholders in an S corporation is:

Accepted Answer

A)  75.
B)  100.
C)  200.
D)  Some other number.
E)  Indeterminable.F) B) and E)
G) A) and B)

Question 16

​A distribution from the other adjustment account (OAA) is not taxable to an S shareholder.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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.

Accepted Answer

The answer of If an S corporation has C corporation...

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

As with partnerships,the income,deductions,and tax credits of an S corporation ____________________ to the shareholders annually.

Accepted Answer

The answer of As with partnerships,the income,deductions,and tax credits of...

Exam 22: S Corporations

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

Correct Answer
verified

A distribution from OAA is taxable.

Correct Answer
verified

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.

Correct Answer
verified

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

Correct Answer
verified

The maximum number of actual shareholders in an S corporation is:

Correct Answer
verified

An S corporation must possess which of the following characteristics?

Correct Answer
verified

Most limited liability partnerships can own stock in an S corporation.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Which item does not appear on Schedule K of Form 1120S?

Correct Answer
verified

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

Correct Answer
verified

Which,if any,of the following items decreases an S corporation's AAA?

Correct Answer
verified

During the year,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.At the end of last year,his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

Correct Answer
verified

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:

Correct Answer
verified

As with partnerships,the income,deductions,and tax credits of an S corporation ____________________ to the shareholders annually.

Correct Answer
verified

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

Correct Answer
verified

A distribution from the other adjustment account (OAA) is not taxable to an S shareholder.

Correct Answer
verified

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

Correct Answer
verified

Compare the distribution of property rules for an S corporation with the corresponding partnership rules.

Correct Answer
verified
The major difference involves distributi...
View Answer

Exam 22: S Corporations

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

Correct AnswerverifiedShow Answer

A distribution from OAA is taxable.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

Correct AnswerverifiedShow Answer

The maximum number of actual shareholders in an S corporation is:

Correct AnswerverifiedShow Answer

An S corporation must possess which of the following characteristics?

Correct AnswerverifiedShow Answer

Most limited liability partnerships can own stock in an S corporation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which item does not appear on Schedule K of Form 1120S?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which,if any,of the following items decreases an S corporation's AAA?

Correct AnswerverifiedShow Answer

During the year,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.At the end of last year,his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

As with partnerships,the income,deductions,and tax credits of an S corporation ____________________ to the shareholders annually.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

​A distribution from the other adjustment account (OAA) is not taxable to an S shareholder.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Compare the distribution of property rules for an S corporation with the corresponding partnership rules.

Correct AnswerverifiedThe major difference involves distributi...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

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:

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

A distribution from the other adjustment account (OAA) is not taxable to an S shareholder.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The major difference involves distributi...
View Answer