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Exam 15: S Corporations

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Question 21

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

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Question 22

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

A) Payroll penalty.
B) Unreasonable compensation.
C) Life insurance proceeds (nontaxable to the recipient S corporation) .
D) Taxable interest.
E) None of the above affects the OAA.

F) B) and E)
G) C) and D)

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Question 23

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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).

An S corporation can claim a deduction for its NOL carryovers.

If an S corporation shareholder's basis in a loan to the entity has been _________________,the shareholder recognizes gross income when the S corporation repays the shareholder.

Depreciation recapture income is a ____________________ computed amount.

When an S corporation liquidates,which of its tax attributes disappear?

Explain the OAA concept.

Compare the distribution of property rules for an S corporation with the corresponding partnership rules.

If an S corporation has C corporation E & P and passive investment income in excess of ____________________ % of its gross receipts for ____________________ consecutive taxable years,the S election is terminated at the beginning of the ____________________ year.

The corporate-level tax on recognized built-in gains applies in 2015 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.

On January 2,2014,Tim loans his S corporation $10,000.By the end of 2014,Tim's stock basis is zero,and the basis in his note has been reduced to $8,000.During 2015,the company's operating income is $10,000.The company makes 2015 distributions to Tim of $8,000.Tim reports a(n) :

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

On January 1,Bobby and Alice own equally all of the stock of an electing S corporation called Prairie Dirt Delight.The dirt company has a $60,000 loss for a non-leap year.On the 200th day of the year,Bobby sells his one-half of the stock to his son,Saul.How much of the $60,000 loss,if any,is allocated to Bobby?

Non-separately computed loss ____________________ a S shareholder's stock basis.

The Schedule M-3 is the same for a C corporation and an S corporation.

Grams,Inc. ,a calendar year S corporation is a manufacturer of widgets.Grams reports $20,000 DPGR and $15,000 of wages;its S corporation's QPAI is $5,000.Janet owns a 40% interest in the S corporation.All expenses that reduce DPGR are from wages,and all wages paid relate to DPGR.How much QPAI and wages are allocated to Janet?

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

The LIFO recapture tax is a variation of the passive investment income penalty tax.

An S corporation is limited to a theoretical maximum of ____________________ shareholders.