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Exam 15: S Corporations

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Question 31

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A calendar year C corporation reports a $41,000 NOL in 2015, but it elects S status for 2016 and generates an NOL of $30,000 in that year. At all times during 2016, the stock of the corporation was owned by the same 10 shareholders, each of whom owned 10% of the stock. Kris, one of the 10 shareholders, holds an S stock basis of $2,300 at the beginning of 2016. How much of the 2016 loss, if any, is deductible by Kris?

A) $0
B) $2,300
C) $3,000
D) $7,100

E) C) and D)
F) A) and C)

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Question 32

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Which corporation is eligible to make the S election?

A) Non-U.S. corporation.
B) Limited liability company.
C) Insurance company.
D) U.S. bank.
E) None of the above can select S status.

F) A) and D)
G) D) and E)

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Question 33

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There is no need formally to elect to treat ____________________ members as a single shareholder.

The corporate-level tax on recognized built-in gains applies in 2016 when an S corporation disposes of an asset in a taxable disposition within ten years after the date on which the S election took effect.

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

S corporations are treated as partnerships under state property laws.

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

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

NOL carryovers from C years can be used in an S corporation year against ordinary income.

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

Distribution of loss property by an S corporation to a shareholder generally should be _________________.

Which transaction affects the Other Adjustments Account on an S corporation's Schedule M-2?

Separately stated items are listed on Schedule _________________________ of the Form 1120S.

The termination of an S election occurs on the day after a corporation ceases to be a qualifying S corporation.

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

On January 2, 2015, Tim loans his S corporation $10,000. By the end of 2015, Tim's stock basis is zero, and the basis in his note has been reduced to $8,000. During 2016, the company's operating income is $10,000. The company makes 2016 distributions to Tim of $8,000. Tim reports a(n) :

A distribution from OAA is taxable.

Yates Corporation elects S status, effective for calendar year 2016. Yates' only asset has a basis of $50,200 and a fair market value of $110,400 as of January 1, 2016. The asset is sold at the end of 2016 for $130,800. What amount must Mark Farris, a 60% owner and subject to a 15% income tax rate, pay, if any?

Some ____________________and ​ taxation rules apply to an S corporation.

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