S Corp Operations

Question 1

T/F S Corps are subject to the Corporate Income Tax?

Answer 1

F

Question 2

T/F S Corps are subject to the Accumulated Earnings Tax?

Answer 2

F

Question 3

T/F S Corps are subject to the Personal Holding Company Tax?

Answer 3

F

Question 4

T/F Ordinary items of business income and deductions are separately stated?

Answer 4

F. Distributive share passed through to each of the partners

Question 5

T/F Separately stated items include Section 1231 G/L?

Answer 5

T

Question 6

T/F Separately stated items include Net STCG/L?

Answer 6

T

Question 7

T/F Separately stated items include NLTCG/L?

Answer 7

T

Question 8

T/F Separately stated items include Dividends?

Answer 8

T

Question 9

T/F Separately stated items include Charitable Contributions?

Answer 9

T

Question 10

T/F Separately stated items include Taxes Paid to Foreign Country or US Possession?

Answer 10

T

Question 11

T/F Separately stated items include Tax-Exempt interest and related expense?

Answer 11

T

Question 12

T/F Separately stated items include Investment Income and Related Expense?

Answer 12

T

Question 13

T/F Separately stated items include Amounts previously deducted (bad debts)?

Answer 13

T

Question 14

T/F Separately stated items include Real Estate Activities?

Answer 14

T

Question 15

T/F Separately stated items include Section 179 Deductions?

Answer 15

T

Question 16

T/F Separately stated items include Credits?

Answer 16

T

Question 17

T/F Separately stated items include Other deductions whose separate treatment could affect a SH liability?

Answer 17

T

Question 18

T/F Separately stated items include Taxes Paid to Foreign Country or US Possession?

Answer 18

T

Question 19

T/F Amount of each item distributed to shareholders on a per-share then a per-day basis?

Answer 19

F, Allocated on a per-day then per- share basis

Question 21

T/F Taxpayer’s holding period of S Corp stock includes day of acquisition?

Answer 21

F

Question 22

T/F Taxpayer’s holding period of S Corp stock includes day of disposition?

Answer 22

T

Question 24

T/F C Corporations’ NOL carryovers will transfer to the S Corporation?

Answer 24

F

Question 25

T/F C Corp capital loss carryovers will transfer to the S Corp?

Answer 25

T. Flows through to shareholders

Question 26

Order in which S Corp Distributions are funded?

Answer 26

1) Accumulated Adjustments Account (AAA)
2) Other Adjustments Account (OAA)
3) Stock Basis

Question 27

What does AAA represent

Answer 27

Undistributed Gross Income less Expenses

Question 28

T/F OAA is composed of adjustments made for tax-exempt income and related deductions?

Answer 28

T

Question 29

Amount deductible according to S Corp At-Risk rules?

Answer 29

(1) Money/basis of property contributed to partnership
(2) Amounts lent to the corporation for which the SH has personal liability or has pledged collateral.
(3) Does NOT include S Corp debts to 3P even if SH guarantees (some exceptions)

Question 30

T/F AAA can be reduced below zero?

Answer 30

T, but only by operations, not by distributions.