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Exam 12: S: Corporations

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Question 51

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

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

F) B) and E)
G) B) and D)

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Question 52

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Estela, Inc., a calendar year S corporation, incurred the following items in 2014. Calculate Estela's nonseparately computed income.

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Sales $120,000
Depreciation recapture in...

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Question 53

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

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

Passive investment income (for passive investment income penalty tax)

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

Samantha owned 1,000 shares in Evita, Inc., an S corporation, that uses the calendar year. On October 11, 2014, Samantha sells all of her Evita stock. Her basis at the beginning of 2014 was $60,000. Her share of the corporate income for 2014 was $22,000, and she receives a distribution of $35,000 between January 1 and October 11, 2014. Her stock basis at the time of the sale is:

When an S corporation liquidates, which of its tax attributes disappear?

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

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

Any distribution made by an S corporation during a tax year is taken into account before accounting for the year's losses.

If any entity electing S status is currently a C corporation, NOL carryovers from prior years be used in an S corporation year.

What statement is correct with respect to an S corporation?

Mock Corporation converts to S corporation status in 2014. Mock used the LIFO inventory method in 2013 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 2013 corporate tax liability, assuming that Mock is subject to a 35% tax rate.

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

An S corporation may not amortize its organization expenses.

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

An S election is made on the shareholder's Form 2553.

The passive investment income of an S corporation includes net capital gains from the sale of stocks and securities.

Realized gain is recognized by an S corporation on its distribution of property.