Question 1

On January 2, 2018, David loans his S corporation $10,000.By the end of 2018 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2019, the company's operating income is $10,000.The company makes 2019 distributions to David of $11,000.David reports an) :

Accepted Answer

A)  $1,000 LTCG.
B)  $3,000 LTCG.
C)  $11,000 LTCG.
D)  Loan basis of $10,000.E) B) and C)
F) A) and D)

Question 2

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

Accepted Answer

A)  Husband Jaime and wife Maria count as one shareholder.
B)  Grandmother Adela and granddaughter Maria count as one shareholder.
C)  Husband Jaime and the estate of wife Maria count as one shareholder.
D)  Husband Jaime and ex-wife Isabel count as one shareholder.
E)  None of the above statements is incorrect.F) A) and C)
G) B) and E)

Question 3

You are given the following facts about a solely owned S corporation.What is the shareholder's ending stock basis?

Accepted Answer

A)  $61,800
B)  $68,100
C)  $99,100
D)  $100,100E) None of the above
F) C) and D)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.

Accepted Answer

A) True 
 B)False

Question 6

If a resident alien shareholder moves outside the U.S., the S election is terminated.

Accepted Answer

A) True 
 B)False

Question 7

As with partnerships, the income, deductions, and tax credits of an S corporation to the shareholders annually.

Accepted Answer

The answer of As with partnerships, the income, deductions, and...

Question 8

An S shareholder's stock basis can be reduced below zero.

Accepted Answer

A) True 
 B)False

Question 9

An S corporation shareholder's stock basis includes his or her direct investments plus a ratable share of any corporate liabilities.

Accepted Answer

A) True 
 B)False

Question 10

A former spouse is treated as being in the same family as the individual to whom he or she was married, for purposes of determining the number of S corporation shareholders.

Accepted Answer

A) True 
 B)False

Question 11

The AAA begins with a zero balance on the first day of an S corporation's first tax year.

Accepted Answer

A) True 
 B)False

Question 12

Which, if any, of the following items decreases an S corporation's AAA?

Accepted Answer

A)  Section 1231 loss.
B)  Expenses related to tax-exempt income.
C)  Depletion in excess of basis.
D)  Distribution from earnings and profits.
E)  None of the above affects the AAA.F) A) and D)
G) C) and D)

Question 13

AAA can have a negative balance.

Accepted Answer

A) True 
 B)False

Question 14

The choice of a flow-through entity for a closely-held corporation often is between an)
a Federal tax entity) and an) a state tax entity).

Accepted Answer

S corporat...

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Which statement is incorrect with respect to filing an S election?

Accepted Answer

A)  Form 2553 must be filed.
B)  All shareholders must consent.
C)  The election may be filed in the previous year.
D)  An extension of time is available for filing Form 2553.
E)  None of the above is incorrect.F) None of the above
G) A) and B)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  A partnership.
B)  A nonresident alien.
C)  A three-person LLC.
D)  The estate of a deceased shareholder.
E)  None of the above are eligible shareholders.F) A) and E)
G) B) and D)

Question 19

Non-separately computed loss increases, reduces) a S shareholder's stock basis.

Accepted Answer

The answer of Non-separately computed loss increases, reduces) a S...

Question 20

If an S corporation's beginning balance in OAA is zero, and the following transactions occur, what is the ending OAA balance?

Accepted Answer

A)  $1,300
B)  $7,600
C)  $23,300
D)  $27,500
E)  None of the aboveF) A) and E)
G) A) and D)

Exam 15: S Corporations

Which statement is incorrect with respect to filing an S election?

Correct AnswerverifiedShow Answer

An S shareholder's stock basis can be reduced below zero.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Non-separately computed loss increases, reduces) a S shareholder's stock basis.

Correct AnswerverifiedShow Answer

The AAA begins with a zero balance on the first day of an S corporation's first tax year.

Correct AnswerverifiedShow Answer

If a resident alien shareholder moves outside the U.S., the S election is terminated.

Correct AnswerverifiedShow Answer

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

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On January 2, 2018, David loans his S corporation $10,000.By the end of 2018 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2019, the company's operating income is $10,000.The company makes 2019 distributions to David of $11,000.David reports an) :

Correct AnswerverifiedShow Answer

When loss assets are distributed by an S corporation, a shareholder's basis is equal to the asset's fair market value.

Correct AnswerverifiedShow Answer

You are given the following facts about a solely owned S corporation.What is the shareholder's ending stock basis?

Correct AnswerverifiedShow Answer

A former spouse is treated as being in the same family as the individual to whom he or she was married, for purposes of determining the number of S corporation shareholders.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An S corporation shareholder's stock basis includes his or her direct investments plus a ratable share of any corporate liabilities.

Correct AnswerverifiedShow Answer

AAA can have a negative balance.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As with partnerships, the income, deductions, and tax credits of an S corporation to the shareholders annually.

Correct AnswerverifiedShow Answer

The choice of a flow-through entity for a closely-held corporation often is between an) a Federal tax entity) and an) a state tax entity).

Correct AnswerverifiedS corporat...View AnswerShow Answer

If an S corporation's beginning balance in OAA is zero, and the following transactions occur, what is the ending OAA balance?

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Which, if any, of the following items decreases an S corporation's AAA?

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S corporat...
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