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Exam 15: S Corporations

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Question 31

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

A) Intangible drilling costs.
B) Foreign loss.
C) Utilities expense.
D) Recovery of a tax benefit.
E) All of the above items appear on Schedule K.

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

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Question 32

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

A) Operating income.
B) Long-term capital gain.
C) Cost of goods sold.
D) Short-term capital loss.
E) All of the above affect stock basis.

F) B) and D)
G) All of the above

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Question 33

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Pepper,Inc. ,an S corporation,holds a $1 million balance in accumulated E&P.It reports sales revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.What is Pepper's passive income penalty tax payable,if any?

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

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

Several individuals acquire assets on behalf of Skip Corporation on May 28,2015,purchased assets on June 3,2015,and began business on June 11,2015.They subscribe to shares of stock,file articles of incorporation for Skip,and become shareholders on June 21,2015.The S election must be filed no later than 2 1/2 months after:

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

An S election made before becoming a corporation is valid only beginning with the first 12-month tax year.

What statement is correct with respect to an S corporation?

It is not beneficial for an S corporation to issue § 1244 stock.

What statement is correct with respect to an S corporation?

A two-or-more member ____________________ operates under ____________________ tax principles.

An S corporation reports a recognized built-in gain of $110,000 and taxable income of $98,000.The company carries 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:

Tax-exempt income is listed on Schedule ____________________ of Form 1120S.

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.

Some ____________________ taxation rules apply to an S corporation.

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

An S corporation cannot incur a tax liability at the corporation level.

Post-termination distributions that are charged against OAA are received tax-free.

An S corporation cannot be a shareholder in another corporation.