Question 1

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

Accepted Answer

A) True 
 B)False

Question 2

The passive investment income of an S corporation includes gains from the sale of securities.

Accepted Answer

A) True 
 B)False

Question 3

Since loss property receives a ____________________ in basis without any loss recognition,S corporation distributions of loss property should be ____________________.

Accepted Answer

The answer of Since loss property receives a ____________________ in...

Question 4

An estate may be a shareholder of an S corporation.

Accepted Answer

A) True 
 B)False

Question 5

An S corporation is subject to the following tax.

Accepted Answer

A)   Corporate income tax (§ 11) .
B)   Built-in gains tax.
C)   Alternative minimum tax.
D)   None of the above apply to S corporations.E) B) and C)
F) B) and D)

Question 6

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) A) and C)
G) B) and C)

Question 7

____________________ 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 8

A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

Accepted Answer

A) True 
 B)False

Question 9

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

Accepted Answer

A) True 
 B)False

Question 10

Which statement is incorrect with respect to an S shareholder's consent?

Accepted Answer

A)   A consent extension is available only if Form 2553 is filed on a timely basis,reasonable cause is given,and the interests of the government are not jeopardized.
B)   Both husband and wife must consent if one owns the stock as community property.
C)   An S election requires a consent from all of the S corporation's shareholders.
D)   A consent must be in writing.
E)   None of the above statements is incorrect.F) D) and E)
G) C) and E) E

Question 11

Form 1120S provides an S shareholder's computation of his or her stock basis.

Accepted Answer

A) True 
 B)False

Question 12

Discuss the two methods of allocating tax-related items to S corporation shareholders.

Accepted Answer

​A per-day,per-share method must be used by a shareholder to allocate S corporation items,unless there is a complete termination of the shareholder's interest.This pro rata method assigns an equal amount of S corporation items to each day of the year.If a shareholder's interest changes during the year,this per day method assigns the shareholder a pro rata share of each item for each day the stock is owned.
If there is a complete termination of shareholder's interest,all affected shareholders and the corporation may elect to treat the S taxable year as two tax years.There is an interim closing of the books,and the shareholders report their share on the S corporation items as they actually occur during the year.

Question 13

An S corporation with substantial AEP records 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) All of the above
F) A) and D)

Question 14

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 15

Most limited liability partnerships can own stock in an S corporation.

Accepted Answer

A) True 
 B)False  False

Question 16

Mock Corporation converts to S corporation status in 2015.Mock used the LIFO inventory method in 2014 and had a LIFO inventory of $435,000 (FIFO value of $550,000) on the date of the S election.How much tax must be added to Mock's 2014 corporate tax liability,assuming that Mock is subject to a 35% tax rate.

Accepted Answer

A)   $0
B)   $10,062.50
C)   $40,250
D)   $115,000
E)   Some other amountF) A) and E)
G) A) and D)

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

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

Accepted Answer

A) True 
 B)False

Question 19

Distributions of appreciated property by an S corporation are not taxable to the entity.

Accepted Answer

A) True 
 B)False

Question 20

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.

Accepted Answer

A) True 
 B)False

Exam 15: S Corporations

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

Correct Answer
verified

The passive investment income of an S corporation includes gains from the sale of securities.

Correct Answer
verified

Since loss property receives a in basis without any loss recognition,S corporation distributions of loss property should be .

Correct Answer
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An estate may be a shareholder of an S corporation.

Correct Answer
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An S corporation is subject to the following tax.

Correct Answer
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Which could constitute a second class of stock?

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

Correct Answer
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A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

Correct Answer
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An S shareholder's basis is decreased by distributions treated as being paid from AAA.

Correct Answer
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Which statement is incorrect with respect to an S shareholder's consent?

Correct Answer
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E

Form 1120S provides an S shareholder's computation of his or her stock basis.

Correct Answer
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Discuss the two methods of allocating tax-related items to S corporation shareholders.

An S corporation with substantial AEP records 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 Answer
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Realized gain is recognized by an S corporation on its distribution of ____________________ property.

Correct Answer
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Most limited liability partnerships can own stock in an S corporation.

Correct Answer
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False

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

Correct Answer
verified

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

Correct Answer
verified

Distributions of appreciated property by an S corporation are not taxable to the entity.

Correct Answer
verified

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.

Correct Answer
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Exam 15: S Corporations

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

Correct AnswerverifiedShow Answer

The passive investment income of an S corporation includes gains from the sale of securities.

Correct AnswerverifiedShow Answer

Since loss property receives a ____________________ in basis without any loss recognition,S corporation distributions of loss property should be ____________________.

Correct AnswerverifiedShow Answer

An estate may be a shareholder of an S corporation.

Correct AnswerverifiedShow Answer

An S corporation is subject to the following tax.

Correct AnswerverifiedShow Answer

Which could constitute a second class of stock?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year.

Correct AnswerverifiedShow Answer

An S shareholder's basis is decreased by distributions treated as being paid from AAA.

Correct AnswerverifiedShow Answer

Which statement is incorrect with respect to an S shareholder's consent?

Correct AnswerverifiedE

Form 1120S provides an S shareholder's computation of his or her stock basis.

Correct AnswerverifiedShow Answer

Discuss the two methods of allocating tax-related items to S corporation shareholders.

An S corporation with substantial AEP records 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

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

Correct AnswerverifiedShow Answer

Most limited liability partnerships can own stock in an S corporation.

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

Correct AnswerverifiedShow Answer

Distributions of appreciated property by an S corporation are not taxable to the entity.

Correct AnswerverifiedShow Answer

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.

Correct AnswerverifiedShow Answer

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Since loss property receives a in basis without any loss recognition,S corporation distributions of loss property should be .

Correct Answer
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E

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False

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