Question 1

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 2

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

Accepted Answer

A) True 
 B)False

Question 3

An S corporation does not recognize a loss when distributing assets that are worth less than their basis.

Accepted Answer

A) True 
 B)False

Question 4

Towne, Inc., a calendar year S corporation, holds AAA of $627,050 at the beginning of the tax year. During the year, the following items occur.
  
Calculate Towne's ending AAA balance.

Accepted Answer

The answer of Towne, Inc., a calendar year S corporation,...

Question 5

Discuss two ways that an S election may be terminated.

Accepted Answer

Broadly, there are two ways of terminati...

Question 6

Amit, Inc., an S corporation, holds an AAA balance of $614,000 at the beginning of the tax year. During the year, the following items occur. 
Amit's ending AAA balance is:

Accepted Answer

A)   $1,055,620.
B)   $1,185,150.
C)   $1,191,150.
D)   $1,242,150.
E)   Some other amount.F) A) and E)
G) A) and B)

Question 7

An S corporation's separately stated items generally are identical to those separately stated by_________________________.

Accepted Answer

The answer of An S corporation's separately stated items generally...

Question 8

On January 2, 2018, Tim loans his S corporation $10,000. By the end of 2018, Tim'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 Tim of $8,000. Tim reports a(n) :

Accepted Answer

A)   $2,000 LTCG.
B)   $8,000 LTCG.
C)   Stock basis of $2,000.
D)   Loan basis of $10,000.E) A) and B)
F) C) and D)

Question 9

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

Accepted Answer

The answer of Separately stated items are listed on Schedule...

Question 10

Donna and Mark are married and file a joint return reporting taxable income of $350,000. Donna owns a qualified S corporation that is not a specified service business. During the year, Donna incurs qualified business income of $75,000. Donna's share of wages paid by the business is $20,000. Assuming there is no qualified property factor, calculate her 20% QBI deduction.

Accepted Answer

A)   $0.
B)   $9,750.
C)   $15,000.
D)   $20,000.E) B) and C)
F) A) and C)

Question 11

Shareholders owning a(n) of shares (voting and nonvoting) may ____________________ revoke an S election.

Accepted Answer

majority, ...

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)   Net sales.
B)   Cost of goods sold.
C)   Dividends received.
D)   Depreciation recapture.
E)   All of the above are included in non-separately computed income.F) A) and E)
G) D) and E)

Question 14

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) D) and E)
G) C) and E)

Question 15

Lent Corporation converts to S corporation status in 2018. Lent had been using the LIFO inventory method and held a LIFO inventory value of $510,000 (FIFO value of $650,000) . How much tax must be added to the C corporation tax liability for the year before the S election in 2019.

Accepted Answer

A)   $0.
B)   $7,350.
C)   $29,400.
D)   $140,000.E) A) and B)
F) A) and C)

Question 16

Estella, Inc., a calendar year S corporation, incurred the following items during the tax year.
  
Calculate Estella's nonseparately computed income.

Accepted Answer

The answer of Estella, Inc., a calendar year S corporation,...

Question 17

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 a(n) :

Accepted Answer

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

Question 18

Which of the following reduces a shareholder's S corporation stock basis?

Accepted Answer

A)   Depletion deductions in excess of the basis of property.
B)   Illegal kickbacks paid.
C)   Nontaxable income.
D)   Sales income.
E)   A 20% QBI deduction.F) A) and C)
G) C) and E)

Question 19

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

Accepted Answer

A)   A Roth IRA.
B)   Partnership.
C)   A non-U.S. corporation.
D)   A nonqualifying trust.
E)   None of the above can own stock.F) B) and C)
G) None of the above

Question 20

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

Exam 22: S Corporations

Discuss two ways that an S election may be terminated.

Correct Answer
verified
Broadly, there are two ways of terminati...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

On January 2, 2018, Tim loans his S corporation $10,000. By the end of 2018, Tim'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 Tim of $8,000. Tim reports a(n) :

Correct Answer
verified

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

Correct Answer
verified

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 Answer
verified

An S corporation's separately stated items generally are identical to those separately stated by_________________________.

Correct Answer
verified

Lent Corporation converts to S corporation status in 2018. Lent had been using the LIFO inventory method and held a LIFO inventory value of $510,000 (FIFO value of $650,000) . How much tax must be added to the C corporation tax liability for the year before the S election in 2019.

Correct Answer
verified

Estella, Inc., a calendar year S corporation, incurred the following items during the tax year. Calculate Estella's nonseparately computed income.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Which of the following reduces a shareholder's S corporation stock basis?

Correct Answer
verified

Towne, Inc., a calendar year S corporation, holds AAA of $627,050 at the beginning of the tax year. During the year, the following items occur. Calculate Towne's ending AAA balance.

Correct Answer
verified

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 a(n) :

Correct Answer
verified

Correct Answer
verified

Amit, Inc., an S corporation, holds an AAA balance of $614,000 at the beginning of the tax year. During the year, the following items occur. Amit's ending AAA balance is:

Correct Answer
verified

An S corporation does not recognize a loss when distributing assets that are worth less than their basis.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Shareholders owning a(n) of shares (voting and nonvoting) may ____________________ revoke an S election.

Correct Answer
verified
majority, ...
View Answer

Exam 22: S Corporations

Discuss two ways that an S election may be terminated.

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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

On January 2, 2018, Tim loans his S corporation $10,000. By the end of 2018, Tim'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 Tim of $8,000. Tim reports a(n) :

Correct AnswerverifiedShow Answer

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

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

An S corporation's separately stated items generally are identical to those separately stated by_________________________.

Correct AnswerverifiedShow Answer

Lent Corporation converts to S corporation status in 2018. Lent had been using the LIFO inventory method and held a LIFO inventory value of $510,000 (FIFO value of $650,000) . How much tax must be added to the C corporation tax liability for the year before the S election in 2019.

Correct AnswerverifiedShow Answer

Estella, Inc., a calendar year S corporation, incurred the following items during the tax year. Calculate Estella's nonseparately computed income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following reduces a shareholder's S corporation stock basis?

Correct AnswerverifiedShow Answer

Towne, Inc., a calendar year S corporation, holds AAA of $627,050 at the beginning of the tax year. During the year, the following items occur. Calculate Towne's ending AAA balance.

Correct AnswerverifiedShow Answer

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 a(n) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Amit, Inc., an S corporation, holds an AAA balance of $614,000 at the beginning of the tax year. During the year, the following items occur. Amit's ending AAA balance is:

Correct AnswerverifiedShow Answer

An S corporation does not recognize a loss when distributing assets that are worth less than their 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

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

Correct AnswerverifiedShow Answer

Shareholders owning a(n) of shares (voting and nonvoting) may ____________________ revoke an S election.

Correct Answerverifiedmajority, ...View AnswerShow Answer

Correct Answer
verified
Broadly, there are two ways of terminati...
View Answer

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majority, ...
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