Flow-Through and Multi-Jurisdictional Tax Issues

Question 1

Owner’s basis in an S-Corp (is/isn’t) increased by direct loans to the corp made by the owner

Answer 1

is NOT (debt basis IS)

Question 2

Owner’s debt basis in an S-Corp (is/isn’t) increased by direct loans to the corp made by the owner

Answer 2

IS

Question 3

Companies can re-elect S corp status in ___ years

Answer 3

5

Question 4

What kind of entity cannot become a shareholder in an S Corp?

Answer 4

Partnerships (or LLCs treated as partnerships)

Question 5

Dividend income from investments (is/isn’t) a separately stated item from net business income for an S Corp

Answer 5

IS

Question 6

Basis in (C-Corps/S-Corps) are increased with net income, whereas basis in (C-Corps/S-Corps) are not.

Answer 6

S-Corps are increased with NI, C-Corps are NOT

Question 7

S Corp election must be made prior to ________ (date)

Answer 7

March 15th

Question 8

Shareholder wages in an S-Corp (do/don’t) affect basis

Answer 8

do NOT

Question 9

___% of shareholders must give their consent in order for a S Corp election to be effective. To revoke, ___% of shareholders must elect to revoke.

Answer 9

100%, 50%

Question 10

Built in gains tax only applies if a _______ becomes an S-Corp

Answer 10

C-Corp

Question 11

For S Corps, health insurance premium payments are not included in income if the shareholder owns less than ___% of stock.

Answer 11

2%

Question 12

Section 179 Depreciation (is/isn’t) a separately stated item.

Answer 12

IS

Question 13

Charitable expense (is/isn’t) a separately stated item.

Answer 13

IS

Question 14

Interest income (is/isn’t) a separately stated item.

Answer 14

IS

Question 15

Interest expense (is/isn’t) a separately stated item.

Answer 15

is NOT

Question 16

Guarantee of corporate debt (does/doesn’t) create debt basis

Answer 16

does NOT