Question 1

Claude Bergeron sold 1,000 shares of Ditta,Inc. ,an S corporation,for $12,000.He had owned the stock for three years and had a stock basis of $111,000 in the shares.Claude is single,and he is the original owner of the § 1244 stock shares.Calculate the appropriate tax treatment.

Accepted Answer

A)   No gain or loss.
B)   $50,000 LTCL;$49,000 ordinary deduction.
C)   $50,000 ordinary deduction;$49,000 LTCL.
D)   $99,000 long-term capital loss.E) A) and B)
F) All of the above

Question 2

Which item has no effect on an S corporation's AAA?

Accepted Answer

A)   Stock purchase by a shareholder.
B)   Interest expense.
C)   Cost of goods sold.
D)   Capital loss.
E)   All of the above modify AAA.F) A) and B)
G) C) and D)

Question 3

An item that appears in the "Other Adjustments Account" affects stock basis,but not AAA,such as tax-exempt interest.

Accepted Answer

A) True 
 B)False

Question 4

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 5

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) A) and B)
F) B) and C)

Question 6

If any entity electing S status is currently a C corporation,NOL carryovers from prior years ____________________ be used in an S corporation year.

Accepted Answer

The answer of If any entity electing S status is...

Question 7

An S corporation that has total assets of at least $10 million on Schedule L at the end of the tax year must file a Schedule M-3.

Accepted Answer

A) True 
 B)False

Question 8

For a new corporation,a premature S election may not be effective.

Accepted Answer

A) True 
 B)False

Question 9

Tax-exempt income at the corporate level flows through as exempt to S shareholders.

Accepted Answer

A) True 
 B)False

Question 10

Which statement is correct 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)   All of the above statements are correct.F) B) and C)
G) A) and E)

Question 11

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 12

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

Accepted Answer

A) True 
 B)False

Question 13

Persons who were S shareholders during any part of the year before the election date,but were not shareholders when the election was made,also must consent to an S election.

Accepted Answer

A) True 
 B)False

Question 14

Most IRAs cannot own stock in an S corporation.

Accepted Answer

A) True 
 B)False

Question 15

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) C) and D)
G) B) and D)

Question 16

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

Accepted Answer

A) True 
 B)False

Exam 15: S Corporations

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

Correct Answer
verified

An S corporation that has total assets of at least $10 million on Schedule L at the end of the tax year must file a Schedule M-3.

Correct Answer
verified

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

Correct Answer
verified

If any entity electing S status is currently a C corporation,NOL carryovers from prior years ____________________ be used in an S corporation year.

Correct Answer
verified

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 Answer
verified

For a new corporation,a premature S election may not be effective.

Correct Answer
verified

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

Correct Answer
verified

Which item has no effect on an S corporation's AAA?

Correct Answer
verified

Tax-exempt income at the corporate level flows through as exempt to S shareholders.

Correct Answer
verified

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

Correct Answer
verified

An item that appears in the "Other Adjustments Account" affects stock basis,but not AAA,such as tax-exempt interest.

Correct Answer
verified

Claude Bergeron sold 1,000 shares of Ditta,Inc. ,an S corporation,for $12,000.He had owned the stock for three years and had a stock basis of $111,000 in the shares.Claude is single,and he is the original owner of the § 1244 stock shares.Calculate the appropriate tax treatment.

Correct Answer
verified

Most IRAs cannot own stock in an S corporation.

Correct Answer
verified

Persons who were S shareholders during any part of the year before the election date,but were not shareholders when the election was made,also must consent to an S election.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Exam 15: S Corporations

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

Correct AnswerverifiedShow Answer

An S corporation that has total assets of at least $10 million on Schedule L at the end of the tax year must file a Schedule M-3.

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

If any entity electing S status is currently a C corporation,NOL carryovers from prior years ____________________ be used in an S corporation year.

Correct AnswerverifiedShow Answer

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

For a new corporation,a premature S election may not be effective.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which item has no effect on an S corporation's AAA?

Correct AnswerverifiedShow Answer

Tax-exempt income at the corporate level flows through as exempt to S shareholders.

Correct AnswerverifiedShow Answer

Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

Correct AnswerverifiedShow Answer

An item that appears in the "Other Adjustments Account" affects stock basis,but not AAA,such as tax-exempt interest.

Correct AnswerverifiedShow Answer

Claude Bergeron sold 1,000 shares of Ditta,Inc. ,an S corporation,for $12,000.He had owned the stock for three years and had a stock basis of $111,000 in the shares.Claude is single,and he is the original owner of the § 1244 stock shares.Calculate the appropriate tax treatment.

Correct AnswerverifiedShow Answer

Most IRAs cannot own stock in an S corporation.

Correct AnswerverifiedShow Answer

Persons who were S shareholders during any part of the year before the election date,but were not shareholders when the election was made,also must consent to an S election.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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