Question 1

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

Accepted Answer

A)  $61,800
B)  $68,100
C)  $99,100
D)  $100,100E) A) and B)
F) A) and C)

Question 2

An S shareholder's basis is increased by stock purchases and capital contributions.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  Payroll penalty.
B)  Unreasonable compensation.
C)  Life insurance proceeds (nontaxable to the recipient S corporation) .
D)  Taxable interest.E) C) and D)
F) A) and B) C

Question 4

Gene Grams is a 45% owner of a calendar year S corporation during the tax year.His beginning stock basis is $230,000,and the S corporation reports the following items.
​
  
Calculate Grams's stock basis at year-end.

Accepted Answer

The answer of Gene Grams is a 45% owner of...

Question 5

An S corporation can claim a deduction for its NOL amounts.

Accepted Answer

A) True 
 B)False

Question 6

If a resident alien shareholder moves outside the U.S.,the S election is terminated.

Accepted Answer

A) True 
 B)False

Question 7

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.

Accepted Answer

A) True 
 B)False

Question 8

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

The answer of Realized gain is recognized by an S...

Question 11

Non-separately computed loss ____________________ a S shareholder's stock basis.

Accepted Answer

The answer of Non-separately computed loss ____________________ a S shareholder's...

Question 12

Which of the following reduces a shareholder's S corporation stock basis?

Accepted Answer

A)  Depletion deductions in excess of the basis of property.
B)  Illegal kickbacks paid.
C)  Nontaxable income.
D)  Sales income.E) A) and D)
F) None of the above

Question 13

Stock basis first is increased by income items,then ____________________ by distributions,and finally decreased by ____________________.

Accepted Answer

The answer of Stock basis first is increased by income...

Question 14

​AAA can have a negative balance.

Accepted Answer

A) True 
 B)False

Question 15

An S corporation that has total assets of at least $50 million on Schedule L at the end of the tax year must file a Schedule M-3.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

When loss assets are distributed by an S corporation,a shareholder's basis is equal to the asset's fair market value.

Accepted Answer

A) True 
 B)False  True

Question 18

On December 31,Erica Sumners owns one share of an S corporation's 10 outstanding shares of stock.The basis of Erica's share is $300.The next year the S corporation incurs a loss of $3,650.Determine the amount of the loss allocated to Erica,and calculate her stock basis at the end of the second year.

Accepted Answer

The loss assigned to each day of the S corporation's tax year is $10 ($3,650/365 days).For each day,$1 is allocated to each outstanding share ($10/10 shares).Erica is allocated $365 of loss for her one share owned during the tax year.However,she is limited to a loss deduction of $300,i.e.,such that her stock basis reaches zero.Her stock basis is zero at the end of the year.She has a $65 loss carryforward available for deduction in subsequent years.

Question 19

Towne,Inc.,a calendar year S corporation,holds AAA of $627,050 at the beginning of the tax year.During the year,the following items occur.
​
  
Calculate Towne's ending AAA balance.

Accepted Answer

The answer of Towne,Inc.,a calendar year S corporation,holds AAA of...

Question 20

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

Accepted Answer

A) True 
 B)False

Exam 22: S Corporations

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

Correct Answer
verified

An S shareholder's basis is increased by stock purchases and capital contributions.

Correct Answer
verified

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

Correct Answer
verified
C

Gene Grams is a 45% owner of a calendar year S corporation during the tax year.His beginning stock basis is $230,000,and the S corporation reports the following items. Calculate Grams's stock basis at year-end.

Correct Answer
verified

An S corporation can claim a deduction for its NOL amounts.

Correct Answer
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If a resident alien shareholder moves outside the U.S.,the S election is terminated.

Correct Answer
verified

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.

Correct Answer
verified

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Non-separately computed loss ____________________ a S shareholder's stock basis.

Correct Answer
verified

Which of the following reduces a shareholder's S corporation stock basis?

Correct Answer
verified

Stock basis first is increased by income items,then by distributions,and finally decreased by .

Correct Answer
verified

AAA can have a negative balance.

Correct Answer
verified

An S corporation that has total assets of at least $50 million on Schedule L at the end of the tax year must file a Schedule M-3.

Correct Answer
verified

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

Correct Answer
verified

When loss assets are distributed by an S corporation,a shareholder's basis is equal to the asset's fair market value.

Correct Answer
verified
True

On December 31,Erica Sumners owns one share of an S corporation's 10 outstanding shares of stock.The basis of Erica's share is $300.The next year the S corporation incurs a loss of $3,650.Determine the amount of the loss allocated to Erica,and calculate her stock basis at the end of the second year.

Towne,Inc.,a calendar year S corporation,holds AAA of $627,050 at the beginning of the tax year.During the year,the following items occur. Calculate Towne's ending AAA balance.

Correct Answer
verified

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

Correct Answer
verified

Exam 22: S Corporations

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

Correct AnswerverifiedShow Answer

An S shareholder's basis is increased by stock purchases and capital contributions.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

Gene Grams is a 45% owner of a calendar year S corporation during the tax year.His beginning stock basis is $230,000,and the S corporation reports the following items. ​ Calculate Grams's stock basis at year-end.

Correct AnswerverifiedShow Answer

An S corporation can claim a deduction for its NOL amounts.

Correct AnswerverifiedShow Answer

If a resident alien shareholder moves outside the U.S.,the S election is terminated.

Correct AnswerverifiedShow Answer

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.

Correct AnswerverifiedShow Answer

Any distribution of cash or property by a corporation that does not exceed the balance of AAA with respect to S stock during a post-termination transition period of approximately one year is applied against and reduces the basis of the S stock.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Non-separately computed loss ____________________ a S shareholder's stock basis.

Correct AnswerverifiedShow Answer

Which of the following reduces a shareholder's S corporation stock basis?

Correct AnswerverifiedShow Answer

Stock basis first is increased by income items,then ____________________ by distributions,and finally decreased by ____________________.

Correct AnswerverifiedShow Answer

​AAA can have a negative balance.

Correct AnswerverifiedShow Answer

An S corporation that has total assets of at least $50 million on Schedule L at the end of the tax year must file a Schedule M-3.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When loss assets are distributed by an S corporation,a shareholder's basis is equal to the asset's fair market value.

Correct AnswerverifiedTrue

Towne,Inc.,a calendar year S corporation,holds AAA of $627,050 at the beginning of the tax year.During the year,the following items occur. ​ Calculate Towne's ending AAA balance.

Correct AnswerverifiedShow Answer

S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis).

Correct AnswerverifiedShow Answer

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

Correct Answer
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Correct Answer
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Correct Answer
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C

Gene Grams is a 45% owner of a calendar year S corporation during the tax year.His beginning stock basis is $230,000,and the S corporation reports the following items. Calculate Grams's stock basis at year-end.

Correct Answer
verified

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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Correct Answer
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Correct Answer
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Stock basis first is increased by income items,then by distributions,and finally decreased by .

Correct Answer
verified

AAA can have a negative balance.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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True

Towne,Inc.,a calendar year S corporation,holds AAA of $627,050 at the beginning of the tax year.During the year,the following items occur. Calculate Towne's ending AAA balance.

Correct Answer
verified

Correct Answer
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