Question 1

Which item has no effect on an S corporation's AAA?

Accepted Answer

A)   Stock purchase by a shareholder.
B)   Interest expense.
C)   Cost of goods sold.
D)   Capital loss.
E)   All have an effect on AAA.F) D) and E)
G) B) and D)

Question 2

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Accepted Answer

A) True 
 B)False

Question 3

An S corporation cannot incur a tax liability at the corporation level.

Accepted Answer

A) True 
 B)False

Question 4

Pepper, Inc., an S corporation, holds a $1 million balance in accumulated E&P. It reports sales revenues of $400,000, taxable interest of $380,000, operating expenses of $250,000, and deductions attributable to the interest income of $140,000. What is Pepper's passive income penalty tax payable, if any?

Accepted Answer

A)   $380,000.
B)   $116,842.
C)   $24,537.
D)   $0.E) C) and D)
F) B) and D)

Question 5

As with partnerships, the income, deductions, and tax credits of an S corporation ____________ to the shareholders annually.

Accepted Answer

The answer of As with partnerships, the income, deductions, and...

Question 6

Non-separately computed loss ______________ (increases, reduces) a S shareholder's stock basis.

Accepted Answer

The answer of Non-separately computed loss ______________ (increases, reduces) a...

Question 7

Which item does not appear on Schedule K of Form 1120S?

Accepted Answer

A)   Tax-exempt interest income.
B)   Section 1231 gain.
C)   Section 179 depreciation deduction.
D)   Depreciation recapture income.
E)   All of the above appear on Schedule K.F) C) and E)
G) A) and E)

Question 8

AAA can have a negative balance.

Accepted Answer

A) True 
 B)False

Question 9

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

Accepted Answer

A) True 
 B)False

Exam 22: S Corporations

Which item does not appear on Schedule K of Form 1120S?

Correct Answer
verified

Which item has no effect on an S corporation's AAA?

Correct Answer
verified

As with partnerships, the income, deductions, and tax credits of an S corporation ____________ to the shareholders annually.

Correct Answer
verified

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Correct Answer
verified

AAA can have a negative balance.

Correct Answer
verified

Correct Answer
verified

Non-separately computed loss ______________ (increases, reduces) a S shareholder's stock basis.

Correct Answer
verified

An S corporation cannot incur a tax liability at the corporation level.

Correct Answer
verified

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

Correct Answer
verified

Exam 22: S Corporations

Which item does not appear on Schedule K of Form 1120S?

Correct AnswerverifiedShow Answer

Which item has no effect on an S corporation's AAA?

Correct AnswerverifiedShow Answer

As with partnerships, the income, deductions, and tax credits of an S corporation ____________ to the shareholders annually.

Correct AnswerverifiedShow Answer

An S shareholder's stock basis does not include a ratable share of S corporation liabilities.

Correct AnswerverifiedShow Answer

AAA can have a negative balance.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Non-separately computed loss ______________ (increases, reduces) a S shareholder's stock basis.

Correct AnswerverifiedShow Answer

An S corporation cannot incur a tax liability at the corporation level.

Correct AnswerverifiedShow Answer

An S shareholder's stock basis is reduced by flow-through losses before accounting for distributions.

Correct AnswerverifiedShow Answer

Correct Answer
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