Question 1

Identify which of the following statements is false.

Accepted Answer

A)   An S corporation files a Form 1120S corporate income tax return on or before the 15th day of the fourth month following the close of its tax year.
B)   An S corporation's ordinary income or loss is reported by an individual shareholder on Schedule E of Form 1040.
C)   An S corporation that owes the built-in gains tax or the excess net passive income tax must make quarterly estimated tax payments.
D)   An S corporation cannot use the prior-year tax liability exception when determining the required payment to be made with respect to the built-in gains tax.E) A) and D)
F) C) and D)

Question 2

King Corporation, a cash method taxpayer that uses the calendar year as its tax year, was incorporated on June 1, 1984. The corporation made its initial S election on December 1 of last year, effective for the current tax year. Earnings and profits of $60,000 have been retained from C corporation tax years. Which one of the following events results in the recognition of a built-in gain?

Accepted Answer

A)   collection of accounts receivable in the current year that resulted from services performed last year
B)   collection of interest income earned in the current year on bonds purchased on January 1 of last year
C)   collection of dividends declared on April 5 of the current year on stock purchased on February 14 of the current year
D)   None of the above are built-in gains.E) A) and B)
F) A) and C)

Question 3

David owns 25% of an S corporation's stock (a capital asset) for the first three months of the S corporation's tax year. During the year, the S corporation has $16,000 of ordinary income and $32,000 of long-term capital gain. David starts the year with a basis of $50,000 in his S corporation stock and sells the stock for $56,000 on April 1 of the year. Assuming all months have 30 days, how much gain/loss does David report on the sale of the stock and what is its character?

Accepted Answer

[$50,000 + ($16,000 ...

Exam 11: S Corporations

Correct Answer
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[$50,000 + ($16,000 ...
View Answer

Identify which of the following statements is false.

Correct Answer
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Exam 11: S Corporations

Correct Answerverified[$50,000 + ($16,000 ...View AnswerShow Answer

Identify which of the following statements is false.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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[$50,000 + ($16,000 ...
View Answer

Correct Answer
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Correct Answer
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