Question 1

An S corporation's LIFO recapture amount equals the excess of the inventory's value under
____________________ over the ____________________ value.

Accepted Answer

The answer of An S corporation's LIFO recapture amount equals...

Question 2

Depletion in excess of basis in property causes a(n) adjustment to an S shareholder's
basis.

Accepted Answer

The answer of Depletion in excess of basis in property...

Question 3

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M­2?

Accepted Answer

A)   Payroll penalty.
B)   Unreasonable compensation.
C)   Life insurance proceeds (nontaxable to the recipient S corporation) .
D)   Taxable interest.
E)   None of the above affects the OAA.F) A) and E)
G) B) and C)

Question 4

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 5

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

Accepted Answer

A)   Intangible drilling costs.
B)   Foreign loss.
C)   Utilities expense.
D)   Recovery of a tax benefit.
E)   All of the above items appear on Schedule K.F) A) and B)
G) None of the above

Question 6

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

Accepted Answer

A)   Husband Jaime and wife Maria count as one shareholder.
B)   Grandmother Adela and granddaughter Maria count as one shareholder.
C)   Husband Jaime and the estate of wife Maria count as one shareholder.
D)   Husband Jaime and ex-wife Isabel count as one shareholder.
E)   None of the above statements is incorrect.F) C) and D)
G) A) and B)

Question 7

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. Determine Bonnie's initial 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.

Accepted Answer

a. Bonnie's initial basis in her stock i...

Question 8

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Accepted Answer

A) True 
 B)False

Question 9

An S corporation is limited to a theoretical maximum of shareholders.

Accepted Answer

The answer of An S corporation is limited to a...

Question 10

NOL carryovers from C years can be used in an S corporation year against ordinary income.

Accepted Answer

A) True 
 B)False

Question 11

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) A) and B)

Question 12

Discuss two ways that an S election may be terminated.

Accepted Answer

Broadly, there are two ways of terminati...

Question 13

Match the term with the proper response. There may be more than one responses for each term.
-OAA

Accepted Answer

A)  Gross receipts from royalties, passive rents, dividends, interest, etc.
B)  Penalty tax to stop an S corporation from avoiding the corporate tax on disposition of appreciated property.
C)  Cumulative total of undistributed non-separately and separately stated items.
D)  Tax-free distribution.
E)  Taxed as dividend income.F) A) and E)
G) None of the above

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The § 1202 exclusion of on the disposition of small business stock (is/is not)
available for S stock.

Accepted Answer

The answer of The § 1202 exclusion of on the...

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Post-termination distributions by a former S corporation that are charged against do not get tax-free treatment.

Accepted Answer

The answer of Post-termination distributions by a former S corporation...

Question 18

Match the term with the proper response. There may be more than one responses for each term.
-Built-in gains tax

Accepted Answer

A)  Gross receipts from royalties, passive rents, dividends, interest, etc.
B)  Penalty tax to stop an S corporation from avoiding the corporate tax on disposition of appreciated property.
C)  Cumulative total of undistributed non-separately and separately stated items.
D)  Tax-free distribution.
E)  Taxed as dividend income.F) C) and D)
G) A) and D)

Question 19

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

Accepted Answer

The answer of Separately stated items are listed on Schedule...

Question 20

Which statement is correct with respect to filing an S election?

Accepted Answer

A)   Form 2553 must be filed.
B)   All shareholders must consent.
C)   The election may be filed in the previous year.
D)   An extension of time is available for filing Form 2553.
E)   All of the above statements are correct.F) B) and E)
G) D) and E)

Exam 22: S Corporations

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

Correct Answer
verified

Depletion in excess of basis in property causes a(n) adjustment to an S shareholder's basis.

Correct Answer
verified

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

Correct Answer
verified

Post-termination distributions by a former S corporation that are charged against do not get tax-free treatment.

Correct Answer
verified

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

Correct Answer
verified

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

Correct Answer
verified

Discuss two ways that an S election may be terminated.

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

Which statement is correct with respect to filing an S election?

Correct Answer
verified

Correct Answer
verified
a. Bonnie's initial basis in her stock i...
View Answer

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

Correct Answer
verified

An S corporation's LIFO recapture amount equals the excess of the inventory's value under over the value.

Correct Answer
verified

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Correct Answer
verified

NOL carryovers from C years can be used in an S corporation year against ordinary income.

Correct Answer
verified

The § 1202 exclusion of on the disposition of small business stock (is/is not) available for S stock.

Correct Answer
verified

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M2?

Correct Answer
verified

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

Correct Answer
verified

Match the term with the proper response. There may be more than one responses for each term. -OAA

Correct Answer
verified

Match the term with the proper response. There may be more than one responses for each term. -Built-in gains tax

Correct Answer
verified

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

Correct Answer
verified

An S corporation is limited to a theoretical maximum of shareholders.

Correct Answer
verified

Exam 22: S Corporations

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

Correct AnswerverifiedShow Answer

Depletion in excess of basis in property causes a(n) adjustment to an S shareholder's basis.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Post-termination distributions by a former S corporation that are charged against do not get tax-free treatment.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

Correct AnswerverifiedShow Answer

Discuss two ways that an S election may be terminated.

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

Which statement is correct with respect to filing an S election?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Bonnie's initial basis in her stock i...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

An S corporation's LIFO recapture amount equals the excess of the inventory's value under ____________________ over the ____________________ value.

Correct AnswerverifiedShow Answer

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Correct AnswerverifiedShow Answer

NOL carryovers from C years can be used in an S corporation year against ordinary income.

Correct AnswerverifiedShow Answer

The § 1202 exclusion of on the disposition of small business stock (is/is not) available for S stock.

Correct AnswerverifiedShow Answer

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M­2?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Match the term with the proper response. There may be more than one responses for each term. -OAA

Correct AnswerverifiedShow Answer

Match the term with the proper response. There may be more than one responses for each term. -Built-in gains tax

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An S corporation is limited to a theoretical maximum of shareholders.

Correct AnswerverifiedShow Answer

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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Broadly, there are two ways of terminati...
View Answer

Correct Answer
verified

Correct Answer
verified
a. Bonnie's initial basis in her stock i...
View Answer

Correct Answer
verified

An S corporation's LIFO recapture amount equals the excess of the inventory's value under over the value.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M2?

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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