Review S corps

Question 1

The S election is terminated if the S corporation has passive investment income greater than

Answer 1

25 percent of gross receipts for three consecutive years.

Question 2

Fringe benefits paid by an S corporation are deductible by the S corporation only for

Answer 2

non-shareholder employees and those employee-shareholders owning 2 percent or less of the S corporation.
or
if included as part of income on the shareholder’s W-2

Question 3

In order for an S corporation election to be valid

Answer 3

it must be agreed upon, in writing, by all shareholders.

Question 4

S corporation status can be revoked if shareholders owning more than

Answer 4

50% of the total number of issued and outstanding shares consent. (The specific percentage of voting and nonvoting shareholders is not considered, just the total.)

Question 5

When calculating the stock basis for stockholders

Answer 5

Everything is included except for wages earned by the stockholder
Debt is not included (This will be included in a partnership only)

Question 6

Who cant be a shareholder of an S corp

Answer 6

Any corporation or partnership

Question 7

What counts as one stockholder

Answer 7

All members of a family even an X wife or husband