Question 1

There is no limit on the amount of passive investment income that an S corporation can receive during the year.

Accepted Answer

A) True 
 B)False

Question 2

Stock basis first is increased by income items, then ____________________ by distributions, and finally decreased by ____________________.

Accepted Answer

The answer of Stock basis first is increased by income...

Question 3

An S corporation with substantial AEP has operating revenues of $410,000, taxable interest income of $390,000, operating expenses of $260,000, and deductions attributable to the interest of $150,000. The passive income penalty tax payable, if any, is:

Accepted Answer

A)   $0.
B)   $40,923.
C)   $116,923.
D)   $136,500.
E)   None of the above.F) B) and D)
G) B) and C)

Question 4

An estate can be an S corporation shareholder.

Accepted Answer

A) True 
 B)False

Question 5

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)   $77,950.
B)   $82,750.
C)   $97,100.
D)   $103,225.
E)   Some other answer.F) C) and D)
G) A) and B)

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Discuss the two methods of allocating S items to shareholders.

Accepted Answer

A per-day, per-share method must be used...

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which, if any, of the following can be an eligible shareholder of an S corporation?

Accepted Answer

A)   A resident alien.
B)   Limited liability company.
C)   A foreign corporation.
D)   A Roth IRA.
E)   None of the above can own S corporation stock.F) None of the above
G) B) and C)

Question 10

Which could constitute a second class of stock under the S corporation rules?

Accepted Answer

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

Question 11

An S shareholder's basis in his or her stock can be reduced below zero.

Accepted Answer

A) True 
 B)False

Question 12

Rents always are considered to be passive investment income in S status.

Accepted Answer

A) True 
 B)False

Question 13

An S corporation must possess the following characteristic(s) :

Accepted Answer

A)   No more than 100 shareholders.
B)   Corporation organized in the U.S.
C)   Only one class of stock.
D)   All of the above are required of S corporations.
E)   None of the above is required for S corporations.F) All of the above
G) A) and E)

Question 14

If an S corporation shareholder's basis in a loan to the entity has been reduced, the shareholder recognizes gross income when the S corporation ____________________ the shareholder.

Accepted Answer

The answer of If an S corporation shareholder's basis in...

Question 15

S corporation income is taxed at the ____________________ level and not at the ____________________ level.
or

Accepted Answer

shareholde...

Question 16

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

Accepted Answer

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

Question 17

Tax-exempt income is a Schedule K item for an S corporation.

Accepted Answer

A) True 
 B)False

Question 18

Depreciation recapture income is a ____________________ computed amount.

Accepted Answer

The answer of Depreciation recapture income is a ____________________ computed...

Question 19

An S corporation recognizes a gain on any distribution of ____________________ property.

Accepted Answer

The answer of An S corporation recognizes a gain on...

Question 20

Simmen, Inc., a calendar year S corporation, incurred the following items in 2011.
  Calculate Simmen's nonseparately computed income.

Accepted Answer

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

Exam 12: S: Corporations

Depreciation recapture income is a ____________________ computed amount.

Correct AnswerverifiedShow Answer

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

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

An S corporation with substantial AEP has operating revenues of $410,000, taxable interest income of $390,000, operating expenses of $260,000, and deductions attributable to the interest of $150,000. The passive income penalty tax payable, if any, is:

Correct AnswerverifiedShow Answer

There is no limit on the amount of passive investment income that an S corporation can receive during the year.

Correct AnswerverifiedShow Answer

Tax-exempt income is a Schedule K item for an S corporation.

Correct AnswerverifiedShow Answer

An S corporation recognizes a gain on any distribution of ____________________ property.

Correct AnswerverifiedShow Answer

Stock basis first is increased by income items, then ____________________ by distributions, and finally decreased by ____________________.

Correct AnswerverifiedShow Answer

An S shareholder's basis in his or her stock can be reduced below zero.

Correct AnswerverifiedShow Answer

Discuss the two methods of allocating S items to shareholders.

Correct AnswerverifiedA per-day, per-share method must be used...View AnswerShow Answer

Simmen, Inc., a calendar year S corporation, incurred the following items in 2011. Calculate Simmen's nonseparately computed income.

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Which, if any, of the following can be an eligible shareholder of an S corporation?

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

Correct AnswerverifiedShow Answer

S corporation income is taxed at the ____________________ level and not at the ____________________ level. or

Correct Answerverifiedshareholde...View AnswerShow Answer

Rents always are considered to be passive investment income in S status.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An estate can be an S corporation shareholder.

Correct AnswerverifiedShow Answer

An S corporation must possess the following characteristic(s) :

Correct AnswerverifiedShow Answer

If an S corporation shareholder's basis in a loan to the entity has been reduced, the shareholder recognizes gross income when the S corporation ____________________ the shareholder.

Correct AnswerverifiedShow Answer

Which could constitute a second class of stock under the S corporation rules?

Correct AnswerverifiedShow Answer

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Stock basis first is increased by income items, then by distributions, and finally decreased by .

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A per-day, per-share method must be used...
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S corporation income is taxed at the level and not at the level. or

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shareholde...
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