Question 1

An S corporation cannot be a shareholder in another corporation.

Accepted Answer

A) True 
 B)False

Question 2

Alomar, a cash basis S corporation in Orlando, Florida, holds the following assets and liabilities on January 1, 2015, the date the S election is made.  
​
During 2015, Alomar collects the accounts receivable and pays the accounts payable. The land is sold for $3 million, and the taxable income for the year is $590,000. Calculate any built-in gains tax.

Accepted Answer

$206,500. The net unrealized built-in ga...

Question 3

Persons who were S shareholders during any part of the year before the election date, but were not shareholders when the election was made, also must consent to an S election.

Accepted Answer

A) True 
 B)False

Question 4

All tax preference items flow through the S corporation, to be included in the shareholders' AMT calculations.

Accepted Answer

A) True 
 B)False

Question 5

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

Accepted Answer

A) True 
 B)False

Question 6

A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

Accepted Answer

A) True 
 B)False

Question 7

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).

Accepted Answer

S corporat...

Question 8

Estela, Inc., a calendar year S corporation, incurred the following items in 2015.  
​
Calculate Estela's nonseparately computed income.

Accepted Answer

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

Question 9

Some ____________________ taxation rules apply to an S corporation.

Accepted Answer

partnershi...

Question 10

You are given the following facts about a 50% owner of an S corporation. Compute his ending stock basis.  ​

Accepted Answer

A)   $80,950
B)   $85,750
C)   $100,100
D)   $106,225
E)   Some other amountF) None of the above
G) A) and D)

Question 11

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

Accepted Answer

The answer of ____________________ husband and wife must consent to...

Question 12

Which could constitute a second class of stock?

Accepted Answer

A)   Treasury stock.
B)   Phantom stock.
C)   Unexercised stock options.
D)   Warrants.
E)   None of the above.F) B) and C)
G) None of the above

Question 13

Beginning in 2015, the AAA of Amit, Inc., an S corporation, has a balance of $614,000. 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) All of the above
G) B) and C)

Question 14

You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis.  ​

Accepted Answer

A)   $71,600
B)   $74,120
C)   $76,220
D)   $78,920E) B) and C)
F) A) and D)

Question 15

A termination occurs on the day that a corporation ____________________ to be an S corporation.

Accepted Answer

The answer of A termination occurs on the day that...

Question 16

Which item has no effect on an S corporation's AAA?

Accepted Answer

A)   Stock purchase by a shareholder.
B)   Interest expense.
C)   Cost of goods sold.
D)   Capital loss.
E)   All of the above modify AAA.F) All of the above
G) B) and E)

Question 17

An S shareholder who dies during the S corporation tax year must report his or her share of the pro rata income (loss) items up to the date of death, on the final individual tax return.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

What statement is correct with respect to an S corporation?

Accepted Answer

A)   There are now more LLCs than S corporations.
B)   S corporation status allows shareholders immediately to realize tax benefits from corporate losses.
C)   An S corporation is prohibited from being a member of an affiliated group.
D)   An LLP may own stock in an S corporation.
E)   None of the above statements is correct.F) B) and E)
G) B) and D)

Question 20

During 2015, Oxen Corporation incurs the following transactions.  ​
Oxen maintains a valid S election and does not distribute any assets (cash or property)  to its sole shareholder, Megan. As a result, Megan must recognize:

Accepted Answer

A)   Ordinary income of $103,000.
B)   Ordinary income of $103,000 and long-term capital gain of $5,000.
C)   Ordinary income of $103,000, long-term capital gain of $10,000, and $4,000 short-term capital loss.
D)   Ordinary income of $109,000.E) B) and C)
F) A) and D)

Exam 12: S Corporations

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

Correct Answer
verified

Some ____________________ taxation rules apply to an S corporation.

Correct Answer
verified
partnershi...
View Answer

An S shareholder who dies during the S corporation tax year must report his or her share of the pro rata income (loss) items up to the date of death, on the final individual tax return.

Correct Answer
verified

You are given the following facts about a 50% owner of an S corporation. Compute his ending stock basis.

Correct Answer
verified

Estela, Inc., a calendar year S corporation, incurred the following items in 2015. Calculate Estela's nonseparately computed income.

Correct Answer
verified

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

Correct Answer
verified

A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

Correct Answer
verified

Which item has no effect on an S corporation's AAA?

Correct Answer
verified

An S corporation cannot be a shareholder in another corporation.

Correct Answer
verified

Correct Answer
verified
$206,500. The net unrealized built-in ga...
View Answer

A termination occurs on the day that a corporation ____________________ to be an S corporation.

Correct Answer
verified

During 2015, Oxen Corporation incurs the following transactions. Oxen maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder, Megan. As a result, Megan must recognize:

Correct Answer
verified

Beginning in 2015, the AAA of Amit, Inc., an S corporation, has a balance of $614,000. During the year, the following items occur. Amit's ending AAA balance is:

Correct Answer
verified

All tax preference items flow through the S corporation, to be included in the shareholders' AMT calculations.

Correct Answer
verified

Persons who were S shareholders during any part of the year before the election date, but were not shareholders when the election was made, also must consent to an S election.

Correct Answer
verified

Which could constitute a second class of stock?

Correct Answer
verified

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

Correct Answer
verified

You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis.

Correct Answer
verified

What statement is correct with respect to an S corporation?

Correct Answer
verified

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).

Correct Answer
verified
S corporat...
View Answer

Exam 12: S Corporations

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

Correct AnswerverifiedShow Answer

Some ____________________ taxation rules apply to an S corporation.

Correct Answerverifiedpartnershi...View AnswerShow Answer

An S shareholder who dies during the S corporation tax year must report his or her share of the pro rata income (loss) items up to the date of death, on the final individual tax return.

Correct AnswerverifiedShow Answer

You are given the following facts about a 50% owner of an S corporation. Compute his ending stock basis. ​

Correct AnswerverifiedShow Answer

Estela, Inc., a calendar year S corporation, incurred the following items in 2015. ​ Calculate Estela's nonseparately computed income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

Correct AnswerverifiedShow Answer

Which item has no effect on an S corporation's AAA?

Correct AnswerverifiedShow Answer

An S corporation cannot be a shareholder in another corporation.

Correct AnswerverifiedShow Answer

Correct Answerverified$206,500. The net unrealized built-in ga...View AnswerShow Answer

A termination occurs on the day that a corporation ____________________ to be an S corporation.

Correct AnswerverifiedShow Answer

During 2015, Oxen Corporation incurs the following transactions. ​ Oxen maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder, Megan. As a result, Megan must recognize:

Correct AnswerverifiedShow Answer

Beginning in 2015, the AAA of Amit, Inc., an S corporation, has a balance of $614,000. During the year, the following items occur. ​ Amit's ending AAA balance is:

Correct AnswerverifiedShow Answer

All tax preference items flow through the S corporation, to be included in the shareholders' AMT calculations.

Correct AnswerverifiedShow Answer

Persons who were S shareholders during any part of the year before the election date, but were not shareholders when the election was made, also must consent to an S election.

Correct AnswerverifiedShow Answer

Which could constitute a second class of stock?

Correct AnswerverifiedShow Answer

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

Correct AnswerverifiedShow Answer

You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis. ​

Correct AnswerverifiedShow Answer

What statement is correct with respect to an S corporation?

Correct AnswerverifiedShow Answer

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).

Correct AnswerverifiedS corporat...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified
partnershi...
View Answer

Correct Answer
verified

You are given the following facts about a 50% owner of an S corporation. Compute his ending stock basis.

Correct Answer
verified

Estela, Inc., a calendar year S corporation, incurred the following items in 2015. Calculate Estela's nonseparately computed income.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$206,500. The net unrealized built-in ga...
View Answer

Correct Answer
verified

During 2015, Oxen Corporation incurs the following transactions. Oxen maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder, Megan. As a result, Megan must recognize:

Correct Answer
verified

Beginning in 2015, the AAA of Amit, Inc., an S corporation, has a balance of $614,000. During the year, the following items occur. Amit's ending AAA balance is:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis.

Correct Answer
verified

Correct Answer
verified

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).

Correct Answer
verified
S corporat...
View Answer