r5 gone die

Question 1

What makes a company eligible to be an S corp

Answer 1

Has to be a domestic corporation, one class of stock, elibigle shareholders cant be another corporation, limit of 100 shareholders,

Question 2

ok so your company is eligible to be an S Corp, what are the two requirements for election as an S corp

Answer 2

all the shareholders must consent

as to be elected either in the preceding year, or by the 15th day of the third month of the actual year.

Question 3

so sad, breaking moos, your S corp is being terminated, how can it be terminated?

Answer 3

if a majority of the stock holders consent to voluntary conversion

Corp fails to meet any or all the elibility requirements

More than 25% of the corps gross receipts come from passive activities for 3 consecutive years.

Question 4

What tax year do you adopt for a S Corp, whats the rule?

Answer 4

An S corp must adopt a calendar year unless a valid business purpose

Question 5

what causes an unrealized built-in gain

Answer 5

They result from when a C corp elects S Corporation status, and the FMV of a corporate assets exceeds adjusted basis at the date of election

Question 6

so you have a S Corp….and an unrealized built in gain, but when is the corp exempt from a tax on that gain

Answer 6

the sale happens 5 years or more after the s corp election is made

S corporation was never a C Corp

The unrealized built in gain was fully recognized in prior tax years

Question 7

How is the tax on a built in gain even calculated

Answer 7

the tax is 21% (which is the corporate tax rate) TIMES the lesser of:

Net recognized built-in gains for the current year
OR
Taxable income of the S corp as if the corporation were a C corporation

Question 8

What items are seperately listed on an S Corps tax return

Answer 8

Ordinary Income
Rental Income/Loss
Portfolio income (dividends, interest, royalties all capital gains/losses)
Section 1231 gains and losses
Charitable contributions 
Section 179 deduction
Foreign taxes
Tax-exempt interest

Question 9

so whats the initial basis of a partners interest…this be an equation

Answer 9

Cash (amount contributed)
\+ Property (adj. basis)
- % liabilites assumed by other partners
\+FMV of services
\+% liabilities assumed by you
=Beg. Basis

Question 10

so property is contributed to the partnership, whats its basis

Answer 10

its always the partners BASIS, NOT FMV

Question 11

the partnership has an interest, what its holding period

Answer 11

if the property used to be a partners, then take thei basis…if its something like inventory though then the holding period starts on the date of contribution

Question 12

What is the formula for a partners basis in its partnership interest

Answer 12

Capital account + PArtners share of partnership recourse liabilities

Question 13

When does a partnership no longer exist for tax purposes

Answer 13

when operations cease, or when there are fewer then 2 partners and that means it becomes a sole proprieorship

Question 14

how do you treat guarenteed payments to a partner, what is a guarteed payment anyway

Answer 14

so its a deduction on the partnership tax return, and flows through partners as an ordinary business expense.

Since the partner is not considered an employe, the payment is considered self employment income to the partner.

Question 15

The partnership has a loss, how much of it can a partner deduct

Answer 15

First: limited to the partners adjusted basis in the partnership
Second: limited to the at risk amount
Third: passive actiivty loss limitation considered
Fourth: Excess business loss provisions must be considered.

Question 16

partnership losses are treated in what way at the partner level

Answer 16

partner reports losses on their income tax return to the extent of their basis.

Question 17

How is an LLC treated for federal income tax purposes

Answer 17

llc is treated as a partnership, coproation, or a sole proprietorship

Question 18

what is a controlled taxpayer

Answer 18

any one of two or more tax payers owned or controlled directly or indirectly by the same interests

Question 19

What is a controlled transaction/transfer?

Answer 19

a transaction or transfer between two ro more members of the same group of controlled tax payers

Question 20

Whas an uncontrolled comparable

Answer 20

uncontrolled transaction or taxpayer is compared under any applicable pricing method, with a controlled transaction/taxpayer

Question 21

Why would the IRS make transfer pricing adjustments

Answer 21

to ensure that reported prices that one afifliate charges another affiliate will yield the same results as if it was arms length transaction between two uncontrolled taxpayers

Question 22

What circumstance would a court not support the IRS making transfer pricing adjustments

Answer 22

if the controlled taxpayer shows that the results of the transacitons are within an arms length by two or more uncontrolled comparable transactions

Question 23

Tell me, what is the arms length standard

Answer 23

if the transaction/transfer is consistent with the results that would have been realized if the uncontrolled taxpayers had engaged in the same transaction under the same circumstances.

Question 24

dude what is the Advance pricing agreement program

Answer 24

aims to resolve actual or potential transfer pricing disputes prior to an audit.

Question 25

list the elements that make up an apportionment factor used to apportion income to a state

Answer 25

% of the corps property, payroll, and sales in the state.

Question 26

can you speak to the formula for the foreign tax credit limiation

Answer 26

Pre-credit tax on total taxable income TIMES (foreign soure income / total taxable income)

Question 27

what does BEAT stand for and how is it used

Answer 27

Base Erosion and Anti-absuse Tax

Minimum tax on us corps with 500 mil plus in gross income.