Question 1

An S corporation cannot be a shareholder in another corporation.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

​A corporation can revoke its S election prospectively.

Accepted Answer

A) True 
 B)False

Question 4

What method is used to allocate S corporation income or losses (unless an election to the contrary is made) ?

Accepted Answer

A)  Any method agreed to by all of the shareholders.
B)  Per-day allocation.
C)  FIFO method.
D)  LIFO method.E) A) and B)
F) C) and D)

Question 5

A termination occurs on the day that a corporation ____________________ to be an S corporation.

Accepted Answer

The answer of A termination occurs on the day that...

Question 6

The termination of an S election occurs on the day after a corporation ceases to be a qualifying S corporation.

Accepted Answer

A) True 
 B)False

Question 7

Compensation for services rendered to an S corporation is subject to FICA taxes.

Accepted Answer

A) True 
 B)False

Question 8

​The liquidation of C and S corporations is taxed in the same way.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  A partnership.
B)  A nonresident alien.
C)  A voting trust.
D)  The estate of a deceased shareholder.E) All of the above
F) B) and C)

Question 10

Identify a disadvantage of being an S corporation.

Accepted Answer

A)  Estates can be shareholders.
B)  Losses flow through immediately to the shareholders.
C)  The AMT on corporations is avoided.
D)  Tax-exempt income flows through as excludible to shareholders.
E)  None of the above is a disadvantage of the S election.F) A) and C)
G) B) and C)

Question 11

You are given the following facts about a 40% owner of an S corporation,and you are asked to prepare her ending stock basis.
​

Accepted Answer

A)  $71,600
B)  $74,120
C)  $76,220
D)  $78,920E) A) and B)
F) B) and C)

Question 12

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

Accepted Answer

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) All of the above
G) C) and D)

Question 13

Advise your client how income,expenses,gain,and losses are allocated to shareholders of an S corporation.

Accepted Answer

In general,S corporation items are divid...

Question 14

Explain the OAA concept.

Accepted Answer

S corporations report changes in the AAA...

Question 15

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

Accepted Answer

A)  Husband Jaime and wife Maria count as one shareholder.
B)  Grandmother Adela and granddaughter Maria count as one shareholder.
C)  Husband Jaime and the estate of wife Maria count as one shareholder.
D)  Husband Jaime and ex-wife Isabel count as one shareholder.
E)  None of the above statements is incorrect.F) B) and E)
G) A) and B)

Question 16

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 17

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

Accepted Answer

A)  ​Form 2553 must be filed.
B)  ​All shareholders must consent.
C)  ​The election may not be filed in the previous year.
D)  ​An extension of time is available for filing Form 2553
E)  ​None of the above is incorrectF) B) and E)
G) C) and D)

Question 18

An S corporation shareholder's stock basis includes his or her direct investments plus a ratable share of any corporate liabilities.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

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) D) and E)
G) A) and E)

Question 20

​A one person LLC can be a shareholder of an S corporation.

Accepted Answer

A) True 
 B)False

Exam 22: S Corporations

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

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

A termination occurs on the day that a corporation ____________________ to be an S corporation.

Correct AnswerverifiedShow Answer

​A one person LLC can be a shareholder of an S corporation.

Correct AnswerverifiedShow Answer

​A corporation can revoke its S election prospectively.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

You are given the following facts about a 40% owner of an S corporation,and you are asked to prepare her ending stock basis. ​

Correct AnswerverifiedShow Answer

What method is used to allocate S corporation income or losses (unless an election to the contrary is made) ?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Identify a disadvantage of being an S corporation.

Correct AnswerverifiedShow Answer

An S corporation shareholder's stock basis includes his or her direct investments plus a ratable share of any corporate liabilities.

Correct AnswerverifiedShow Answer

Compensation for services rendered to an S corporation is subject to FICA taxes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The termination of an S election occurs on the day after a corporation ceases to be a qualifying S corporation.

Correct AnswerverifiedShow Answer

Explain the OAA concept.

Correct AnswerverifiedS corporations report changes in the AAA...View AnswerShow Answer

​The liquidation of C and S corporations is taxed in the same way.

Correct AnswerverifiedShow Answer

An S corporation cannot be a shareholder in another corporation.

Correct AnswerverifiedShow Answer

Advise your client how income,expenses,gain,and losses are allocated to shareholders of an S corporation.

Correct AnswerverifiedIn general,S corporation items are divid...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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A one person LLC can be a shareholder of an S corporation.

Correct Answer
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A corporation can revoke its S election prospectively.

Correct Answer
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Correct Answer
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You are given the following facts about a 40% owner of an S corporation,and you are asked to prepare her ending stock basis.

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

Correct Answer
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Correct Answer
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Correct Answer
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S corporations report changes in the AAA...
View Answer

The liquidation of C and S corporations is taxed in the same way.

Correct Answer
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Correct Answer
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Correct Answer
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In general,S corporation items are divid...
View Answer

Correct Answer
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Correct Answer
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