Question 1

S corporations are treated as partnerships under state property laws.

Accepted Answer

A) True 
 B)False

Question 2

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

Accepted Answer

A) True 
 B)False

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

Only 51% of the shareholders must consent to an S election.

Accepted Answer

A) True 
 B)False

Question 5

The corporate-level tax on recognized built-in gains applies in 2014 when an S corporation disposes of an asset in a taxable disposition within ten 12-months years after the date on which the S election took effect.

Accepted Answer

A) True 
 B)False

Question 6

You are a 60% owner of an S corporation. Calculate your ending stock basis, based upon these facts.

Accepted Answer

$52,600 + $15,000 +....

Question 7

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 8

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 9

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 10

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

Accepted Answer

A)   Tax-exempt interest income.
B)   Section 1231 gain.
C)   Section 179 depreciation deduction.
D)   Depreciation recapture income.
E)   All of the above appear on Schedule K.F) A) and C)
G) A) and B)

Question 11

Discuss two ways that an S election may be terminated.

Accepted Answer

Broadly, there are two ways of terminati...

Question 12

An S shareholder's basis is increased by stock purchases and capital contributions.

Accepted Answer

A) True 
 B)False

Question 13

The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

The answer of You are given the following facts about...

Question 15

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

Question 16

Identify a disadvantage of being an S corporation.

Accepted Answer

A)   Estates can be shareholders.
B)   Losses flow through immediately to the shareholders.
C)   The AMT on corporations is avoided.
D)   Tax-exempt income flows through as excludible to shareholders.
E)   None of the above is a disadvantage of the S election.F) B) and C)
G) C) and E)

Question 17

An S corporation recognizes a on any distribution of appreciated property.

Accepted Answer

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

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

During 2014, 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) All of the above
F) A) and B)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 12: S: Corporations

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

Identify a disadvantage of being 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

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

Correct AnswerverifiedShow Answer

You are a 60% owner of an S corporation. Calculate your ending stock basis, based upon these facts.

Correct Answerverified$52,600 + $15,000 +....View AnswerShow Answer

The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

Correct AnswerverifiedShow Answer

Only 51% of the shareholders must consent to an S election.

Correct AnswerverifiedShow Answer

An S corporation recognizes a on any distribution of appreciated property.

Correct AnswerverifiedShow Answer

During 2014, 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

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.

Correct AnswerverifiedShow Answer

The corporate-level tax on recognized built-in gains applies in 2014 when an S corporation disposes of an asset in a taxable disposition within ten 12-months years after the date on which the S election took effect.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

S corporations are treated as partnerships under state property laws.

Correct AnswerverifiedShow Answer

Discuss two ways that an S election may be terminated.

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

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

Correct AnswerverifiedShow Answer

The § 1202 exclusion of gain is not available on disposition of S corporation stock.

Correct AnswerverifiedShow Answer

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

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 is increased by stock purchases and capital contributions.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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S corporat...
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$52,600 + $15,000 +....
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Broadly, there are two ways of terminati...
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