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Exam 22: S Corporations

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Question 51

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S corporations are treated as partnerships under state property laws.

A) True
B) False

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Question 52

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Pepper,Inc.,an S corporation in Norfolk,Virginia,has revenues of $400,000,taxable interest of $380,000,operating expenses of $250,000,and deductions attributable to the interest income of $140,000.Calculate any passive investment income penalty tax payable by this corporation.

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The S corporation pa...

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Question 53

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The carryover period for the NOLs of a C corporation does not continue to run during S corporation years.

You are given the following facts about a 50% owner of an S corporation.Compute her ending stock basis. ​

​A former spouse is treated as being in the same family as the individual to whom he or she was married,for purposes of determining the number of S corporation shareholders.

An S corporation is subject to the following tax(es) .

Most IRAs cannot own stock in an S corporation.

An S corporation is limited to a theoretical maximum of ____________________ shareholders.

An estate may be a shareholder of an S corporation.

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

Tax-exempt income is not separately stated on Schedule K of Form 1120S.

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

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

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

​The AAA begins with a zero balance on the first day of an S corporation's first tax year.

On January 2,2016,David loans his S corporation $10,000.By the end of 2016 David's stock basis is zero and the basis in his note has been reduced to $8,000.During 2017,the company's operating income is $10,000.The company makes 2017 distributions to David of $11,000.David reports a(n) :

Samantha owned 1,000 shares in Evita,Inc.,an S corporation,that uses the calendar year.On October 11,Samantha sells all of her Evita stock.Her stock basis at the beginning of the tax year was $60,000.Evita's ordinary income for the year was $22,000,and she receives a distribution of $35,000 on May 3rd.Her stock basis at the time of the sale is:

Mock Corporation converts to S corporation status in 2018.Mock used the LIFO inventory method in 2017 and had a LIFO inventory of $435,000 (FIFO value of $550,000) on the date of the S election.How much tax must be added to Mock's 2017 corporate tax liability,assuming that Mock is subject to a 35% tax rate.

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

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