Question 1

During the year, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000.At the end of last year, his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

Accepted Answer

The answer of During the year, Miles Nutt, the sole...

Question 2

Which statement is incorrect with respect to an S shareholder's consent?

Accepted Answer

The answer of Which statement is incorrect with respect to...

Question 3

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

Accepted Answer

The answer of Which, if any, of the following items...

Question 4

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

Accepted Answer

Life insurance proceeds that are nontaxable to the recipient S corporation are reported in the Other Adjustments Account on an S corporation's Schedule M-2, as they affect the corporation's accumulated adjustments account but are not taxable income.

Question 5

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

Accepted Answer

Per-day allocation is the method used to allocate S corporation income or losses unless an election to the contrary is made. Under this method, each shareholder's share of the S corporation's income or loss is determined by dividing the number of days during the year that the shareholder held stock in the corporation by the total number of days in the year. This ensures that all shareholders are allocated income or losses in proportion to their ownership of the corporation during the year.

Question 6

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

Accepted Answer

The answer of A new S corporation shareholder can revoke...

Question 7

Amit, Inc., an S corporation, holds an AAA balance of $614,000 at the beginning of the tax year.During the year, the following items occur. 
E)Some other amount.

Accepted Answer

The answer of Amit, Inc., an S corporation, holds an...

Question 8

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

Accepted Answer

Utilities expense does not appear on Schedule K of Form 1120S. However, intangible drilling costs, foreign loss, and recovery of a tax benefit all appear on Schedule K.

Question 9

If an S corporation's beginning balance in OAA is zero, and the following transactions occur, what is the ending OAA balance?

Accepted Answer

- Beginning balance in OAA is zero
- $8,000 of net income is allocated to OAA
- $1,400 of distributions are made to shareholders
- $200 of prior period adjustments are allocated to OAA
- $1,200 of unrealized losses on available-for-sale securities are allocated to OAA
Ending balance in OAA = Beginning balance + Net income allocated to OAA - Distributions to shareholders + Prior period adjustments allocated to OAA + Unrealized losses allocated to OAA
= 0 + 8,000 - 1,400 + 200 + 1,200
= $7,600

Question 10

You are given the following facts about a solely owned S corporation.What is the shareholder's ending stock basis?

Accepted Answer

The shareholder's ending stock basis is equal to the initial investment plus any additional contributions, minus any distributions received and loss allocations. In this case, the initial investment was $50,000, there were no additional contributions, distributions of $40,000 were received, and there were $10,000 of loss allocations. Therefore, the ending stock basis is $50,000 + $0 - $40,000 - $10,000 = $99,100.

Question 11

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

Accepted Answer

The answer of Which, if any, of the following can...

Question 12

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

Accepted Answer

The answer of Several individuals acquire assets on behalf of...

Question 13

Fred is the sole shareholder of an S corporation in Fort Deposit, Alabama.At a time when his stock basis is $20,000, the corporation distributes appreciated property worth $100,000 basis of $20,000).Fred's taxable gain is:

Accepted Answer

When a corporation distributes appreciated property to a shareholder, it is treated as a deemed sale, and the shareholder recognizes gain to the extent of the property's fair market value minus the shareholder's basis. In this case, the appreciated property has a fair market value of $100,000, and Fred's basis is $20,000. Therefore, Fred's taxable gain is $80,000.

Question 14

Which item is not included in an S corporation's nonseparately computed income?

Accepted Answer

Dividends received are considered separately computed income for S corporations and are not included in the nonseparately computed income calculation. The other options, net sales, cost of goods sold, and depreciation recapture, are all included in the nonseparately computed income calculation.

Question 15

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

Accepted Answer

The answer of Which item does not appear on Schedule...

Question 16

Which item has no effect on an S corporation's AAA?

Accepted Answer

The answer of Which item has no effect on an...

Question 17

Kinney, Inc., an electing S corporation, holds $5,000 of AEP and $9,000 in AAA at the beginning of the calendar tax year.Kinney has two shareholders, Eric and Maria, each of whom owns 500 shares of Kinney's stock.Kinney's taxable income is $6,000 for the year.Kinney distributes $6,000 to each shareholder on February 1, and it distributes another $3,000 to each shareholder on September 1.How is Eric taxed on the distribution?

Accepted Answer

The answer of Kinney, Inc., an electing S corporation, holds...

Question 18

The maximum number of actual shareholders in an S corporation is:

Accepted Answer

The answer of The maximum number of actual shareholders in...

Question 19

Which, if any, of the following items decreases an S corporation's AAA?

Accepted Answer

The answer of Which, if any, of the following items...

Question 20

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

Accepted Answer

The answer of Which statement is incorrect with respect to...

Quiz 15: S Corporations

During the year, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000.At the end of last year, his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

Which statement is incorrect with respect to an S shareholder's consent?

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

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

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

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

Amit, Inc., an S corporation, holds an AAA balance of $614,000 at the beginning of the tax year.During the year, the following items occur. E)Some other amount.

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

If an S corporation's beginning balance in OAA is zero, and the following transactions occur, what is the ending OAA balance?

You are given the following facts about a solely owned S corporation.What is the shareholder's ending stock basis?

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

Fred is the sole shareholder of an S corporation in Fort Deposit, Alabama.At a time when his stock basis is $20,000, the corporation distributes appreciated property worth $100,000 basis of $20,000) .Fred's taxable gain is:

Which item is not included in an S corporation's nonseparately computed income?

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

Which item has no effect on an S corporation's AAA?

The maximum number of actual shareholders in an S corporation is:

Which, if any, of the following items decreases an S corporation's AAA?

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