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Exam 12: S: Corporations

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Question 1

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The passive loss limitations apply at the S corporation shareholder level.

A) True
B) False

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Question 2

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The amount of any distribution to an S corporation shareholder is equal to the ____________________ plus the fair market value of any other property distributed..

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

On December 31,2011,Erica Sumners owns one share of an S corporation's 10 outstanding shares of stock.The basis of Erica's share is $300.During 2012,the S corporation has no income or deductions,but incurs a loss of $3,650.Determine the amount of the loss allocated to Erica,and calculate her stock basis at the end of 2012.

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

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

A cash basis calendar year C corporation reports $100,000 of accounts receivable on the date of its conversion to an S corporation on February 14.By the end of the year,$60,000 of these receivables are collected.Calculate any built-in gains tax,assuming that there is sufficient taxable income.

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

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

If an S corporation has C corporate E & P and passive income in excess of ____________________ % of its gross receipts for ____________________ consecutive taxable years,the S election is terminated at the beginning of the ____________________ year.

Milke,Inc. ,an S corporation,has gross receipts of $190,000 and gross income of $170,000.Milke has AEP of $22,000 and ordinary income of $29,000.The company reports passive investment income of $100,000,with $40,000 of expenses directly related to the production of passive investment income.Calculate Milke's excess net passive income and any passive investment income penalty tax.

It is not beneficial for an S corporation to issue § 1244 stock.

An item that appears in the "Other Adjustments Account" affects stock basis,but not AAA,such as tax-exempt interest.

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity,but distributions do not.

A per-day,per-share allocation of flow-through S corporation items must be used,unless the shareholder disposes of the entire interest in the entity.

A two-or-more member LLC operates under partnership tax principles.

Distributions of which assets during an S corporation's post-termination period receive favorable income tax treatment?

Which item is not included in an S corporation's nonseparately computed income?

Pepper,Inc. ,an S corporation,reports sales revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable,if any?

Depreciation recapture income is a Schedule K item.