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Exam 22: S: Corporations

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Question 71

True/False

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

A) True
B) False

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Question 72

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

A) Taxable dividends.
B) Stock dividend (taxable) .
C) Depreciation recapture income.
D) Tax-exempt income.
E) None of the above.

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

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Question 73

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Which tax provision does not apply to an S corporation?

Which, if any, of the following items has no effect on the stock basis of an S corporation shareholder?

A calendar year C corporation reports a $41,000 NOL in 2011, but it elects S status for 2012 and generates an NOL of $30,000 in that year. At all times during 2012, 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 2012. How much of the 2012 loss, if any, is deductible by Kris?

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

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

A distribution of cash or other property by an S corporation to shareholders that does not exceed the balance of AAA during a one-year period following an S election termination receives special capital gain treatment.

Discuss the two methods of allocating tax-related items to S corporation shareholders.

You are a 60% owner of an S corporation. Calculate your ending stock basis, based upon these facts.

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

Post-termination distributions by a former S corporation that are charged against ____________________ do not get tax-free treatment.

An S corporation reports a recognized built-in gain of $110,000 and taxable income of $98,000.The company has an $8,000 NOL carryforward from a C corporation year, and a $7,000 business credit carryforward from a C corporation year.The built-in gains tax liability is:

A per-day, per-share allocation of flow-through S corporation items must be used, unless the shareholder disposes of the entire interest in the entity.

Form 1120S provides a shareholder's computation of his or her stock basis.

Depletion in excess of basis in property causes a(n) ____________________ adjustment to an S shareholder's basis. or

Stock basis first is increased by income items, then ____________________ by distributions, and finally decreased by ____________________.

An S corporation recognizes a ____________________ on any distribution of appreciated property.

An S election is made on the shareholder's Form 1040.

The corporate ____________________ ____________________ tax is avoided in an S corporation.