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Exam 22: S: Corporations

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Question 41

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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.

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Question 42

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____________________ common stock and ____________________ preferred stock (with preference on dividends) are treated as two different classes of stock by the S corporation rules.

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Question 43

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On January 1, 2012, Zundel, Inc., an electing S corporation, has $4,000 of AEP and a balance of $10,000 in AAA.Zundel has two shareholders, Erin and Maine, each of whom owns 500 shares of Zundel's stock.Zundel's 2012 taxable income is $5,000.Zundel distributes $6,000 to each shareholder on February 1, 2012, and distributes another $3,000 to each shareholder on September 1.How is Erin taxed on this distribution?

Where the S corporation rules are silent, partnership rules apply to the S corporation.

An S corporation that has total assets of at least $7.5 million on Schedule L at the end of the tax year must file a Schedule M-3.

Tax-exempt income is a Schedule K item for an S corporation.

Pepper, Inc., an S corporation, 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?

Depreciation recapture income is a ____________________ computed amount.

Which type of distribution from an S corporation is taxed at the 0/15% Federal income tax rate?

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

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

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity, but distributions do not.

The carryover period for the NOLs of a C corporation continues to run during S corporation years.

The passive loss limitations apply at the S corporation shareholder level.

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

A new S corporation shareholder can revoke the S election unilaterally, if he/she owns how much of the existing S corporation's stock?

Blue Corporation elects S status effective for tax year 2012. As of January 1, 2012, Blue's assets were appraised as follows. In each of the following situations, calculate any built-in gains tax, assuming that the highest corporate tax rate is 35%. C corporation taxable income would have been $100,000.

Most IRAs can own stock in an S corporation.

Since loss property receives a ____________________ in basis without any loss recognition, S corporation distributions of loss property should be ____________________.

Trent Huynh is a 45% owner of a calendar year S corporation during 2012.His beginning stock basis is $292,000, and the S corporation reports the following items. Calculate Huynh's stock basis at year-end.