Question 1

An S corporation may not have a ____________________ alien shareholder.

Accepted Answer

The answer of An S corporation may not have a...

Question 2

Realized gain is recognized by an S corporation on its distribution of ____________________ property.

Accepted Answer

The answer of Realized gain is recognized by an S...

Question 3

Several individuals acquire assets on behalf of Skip Corporation on May 28, 2012, purchased assets on June 3, 2012, and began business on June 11, 2012.They subscribe to shares of stock, file articles of incorporation for Skip, and become shareholders on June 21, 2012.The S election must be filed no later than 2 1/2 months after:

Accepted Answer

A)  May 28, 2012.
B)  June 3, 2012.
C)  June 11, 2012.
D)  June 21, 2012.
E)  December 31, 2012.F) C) and D)
G) A) and E)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

If an S corporation excludes cancellation of debt (COD) income from gross income, the excluded amount is applied to _________________ S corporation tax attributes.

Accepted Answer

The answer of If an S corporation excludes cancellation of...

Question 6

Compensation for services rendered to an S corporation is subject to FICA taxes.

Accepted Answer

A) True 
 B)False

Question 7

Identify a disadvantage of being an S corporation.

Accepted Answer

A)  Generally, trusts cannot be shareholders.
B)  Losses flow through to the shareholders.
C)  The AMT on corporations is avoided.
D)  Tax-exempt income flows through to the shareholders.
E)  None of the above is a disadvantage of the S election.F) A) and E)
G) B) and C)

Question 8

Estela, Inc., a calendar year S corporation, incurred the following items in 2012.
  Calculate Estela's nonseparately computed income.

Accepted Answer

The answer of Estela, Inc., a calendar year S corporation,...

Question 9

Which statement is incorrect?

Accepted Answer

A)  S corporations are treated as corporations under state law.
B)  S corporations resemble partnerships under the Federal income tax law.
C)  The alternative minimum tax applies to some S corporations.
D)  An S corporation may not allocate income and deduction items to specific shareholders like a partnership can.E) A) and C)
F) A) and B)

Question 10

On January 2, 2011, David loans his S corporation $10,000, and by the end of 2011 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2012, the company's operating income is $10,000.The company also makes distributions to David of $11,000.David reports a(n) :

Accepted Answer

A)  $1,000 LTCG.
B)  $3,000 LTCG.
C)  $11,000 LTCG.
D)  Loan basis of $10,000.E) B) and D)
F) A) and B)

Question 11

Which equity arrangement cannot be used by an S corporation?

Accepted Answer

A)  Phantom stock.
B)  Stock appreciation rights.
C)  Warrants.
D)  Straight debt.
E)  An insurance company structure.F) C) and D)
G) A) and D)

Question 12

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

Accepted Answer

The major difference involves distributions of appreciated property.Under the S corporation rules, realized gain on distributed appreciated property is recognized to the corporation, which passes through to the shareholders with no corporate-level tax (other than the built-in gains tax).The gain increases the shareholder's stock basis.A realized loss, however, is not recognized for an S corporation distribution.The shareholder takes a market value basis in the property.
On the distribution, the shareholder's stock basis is reduced by the fair market value of the property (but not below zero).
No gain or loss is recognized to a partnership or partners on the distribution of property.Basis to the partner in the asset is the lesser of the partner's basis in the partnership or the entity's basis in the asset.

Question 13

In the case of a complete termination of an S corporation interest, a ____________________ tax year may occur.

Accepted Answer

The answer of In the case of a complete termination...

Question 14

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

Accepted Answer

The answer of Non-separately computed loss ____________________ a S shareholder's...

Question 15

Charitable contributions are subject to a 10% limitation at the S corporation level.

Accepted Answer

A) True 
 B)False

Question 16

S corporation status allows shareholders to realize tax benefits from corporate losses ____________________.

Accepted Answer

The answer of S corporation status allows shareholders to realize...

Question 17

An S corporation may be subject to the following tax.

Accepted Answer

A)  Built-in gains tax.
B)  Foreign earnings tax.
C)  Federal income tax.
D)  Alternative minimum tax.E) C) and D)
F) A) and C)

Question 18

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

Accepted Answer

A)  Section 1244 stock.
B)  "Partial liquidation" stock redemption.
C)  Tax-free "A" reorganization.
D)  Section 1202 capital gain exclusion.E) A) and D)
F) B) and D)

Question 19

The Schedule M-3 is the same for a C corporation and an S corporation.

Accepted Answer

A) True 
 B)False  False

Question 20

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

Accepted Answer

A) True 
 B)False

Exam 22: S: Corporations

An S corporation may not have a ____________________ alien shareholder.

Correct Answer
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Realized gain is recognized by an S corporation on its distribution of ____________________ property.

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

Correct Answer
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If an S corporation excludes cancellation of debt (COD) income from gross income, the excluded amount is applied to _________________ S corporation tax attributes.

Correct Answer
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Compensation for services rendered to an S corporation is subject to FICA taxes.

Correct Answer
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Identify a disadvantage of being an S corporation.

Correct Answer
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Estela, Inc., a calendar year S corporation, incurred the following items in 2012. Calculate Estela's nonseparately computed income.

Correct Answer
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11ea86ec_9dea_8eff_a652_2fecfe30ede8_TB4135_00

Which statement is incorrect?

Correct Answer
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On January 2, 2011, David loans his S corporation $10,000, and by the end of 2011 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2012, the company's operating income is $10,000.The company also makes distributions to David of $11,000.David reports a(n) :

Correct Answer
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Which equity arrangement cannot be used by an S corporation?

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

In the case of a complete termination of an S corporation interest, a ____________________ tax year may occur.

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

Correct Answer
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Charitable contributions are subject to a 10% limitation at the S corporation level.

Correct Answer
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S corporation status allows shareholders to realize tax benefits from corporate losses ____________________.

Correct Answer
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An S corporation may be subject to the following tax.

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

Correct Answer
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The Schedule M-3 is the same for a C corporation and an S corporation.

Correct Answer
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False

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

Correct Answer
verified

Exam 22: S: Corporations

An S corporation may not have a ____________________ alien shareholder.

Correct AnswerverifiedShow Answer

Realized gain is recognized by an S corporation on its distribution of ____________________ property.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If an S corporation excludes cancellation of debt (COD) income from gross income, the excluded amount is applied to _________________ S corporation tax attributes.

Correct AnswerverifiedShow Answer

Compensation for services rendered to an S corporation is subject to FICA taxes.

Correct AnswerverifiedShow Answer

Identify a disadvantage of being an S corporation.

Correct AnswerverifiedShow Answer

Estela, Inc., a calendar year S corporation, incurred the following items in 2012. Calculate Estela's nonseparately computed income.

Correct Answerverified11ea86ec_9dea_8eff_a652_2fecfe30ede8_TB4135_00

Which statement is incorrect?

Correct AnswerverifiedShow Answer

On January 2, 2011, David loans his S corporation $10,000, and by the end of 2011 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2012, the company's operating income is $10,000.The company also makes distributions to David of $11,000.David reports a(n) :

Correct AnswerverifiedShow Answer

Which equity arrangement cannot be used by an S corporation?

Correct AnswerverifiedShow Answer

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

In the case of a complete termination of an S corporation interest, a ____________________ tax year may occur.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Charitable contributions are subject to a 10% limitation at the S corporation level.

Correct AnswerverifiedShow Answer

S corporation status allows shareholders to realize tax benefits from corporate losses ____________________.

Correct AnswerverifiedShow Answer

An S corporation may be subject to the following tax.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Schedule M-3 is the same for a C corporation and an S corporation.

Correct AnswerverifiedFalse

Any losses that are suspended under the at-risk rules are carried forward and are available during an S corporation's post-termination period.

Correct AnswerverifiedShow Answer

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11ea86ec_9dea_8eff_a652_2fecfe30ede8_TB4135_00

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False

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