Log in
Accounting
1
answer
0
watching
124
views

Which of the following is considered an advantage of an Scorporation?

a. The number of shareholders is limited to 100.

b. Only one class of stock may be outstanding.

c. The business may be a foreign corporation.

d. There is pass-through of ordinary loss to theshareholders

e. There are no restrictions on who may be a shareholders

Watch
1
answer
0
watching
124
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Patrina Schowalter
Patrina SchowalterLv2
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related questions

(TCO F) Felicity Inc. is a calendar-year S corporation with thetwo shareholders who each own 50 shares of stock. All shareholderspurchased their stock for $10,000. Mr. D, one of the shareholders,made loans to the coporation of 7,000 and 6,000 on August 1, 2015and June 15, 2016, respectively Mr. D also guaranteed Felicitys20,000 bank loan of 20,000. Felicity Inc had 15,000 ordinary incomein dec 31, 2015. Both shareholders reported their share of thecorporations income on their individual returns for 2015. For 2016Felicity inc, reported an ordinary loss of 5,000. No distributionswere made in 2015 or 2016 by the corporation, what is the adjustedbasis of mr. d’s stock on dec. 31, 2016? If an item does ntocontribute to basis, please explain.

During the current year, Marlene, Nancy and Olive formed a new SCorporation. Solely in exchange for stock, Marlene and Nancycontributed appreciated property, while Olive contributed services.The exchanges of Marlene and Nancy will be nontaxable if:

Olive receives 30% of the stock

Olive receives 80% of the stock

Olive receives 15% of the stock

Marlene and Nancy together receive 50% of the stock

In June of 2018, Alice acquired heronly machine for $30,000 to use in her business. The machine isclassified as 5-year property. Alice’s maximum depreciation(including bonus) on the machine this year is:

$30,000

$12,000

$6,000

$18,000

Cactus Corporation, an S Corporation, had accumulated earningsand profits of $200,000 at the beginning of the tax year. Tex andShirley each own 50% of the stock. During the current year Cactushad $100,000 of ordinary income and distributed $10,000 to Tex and$10,000 to Shirley. What is Tex's taxable income for the currentyear?

$10,000

$0

$100,000

$50,000

Bristol Corporation was formed as an S Corporation on January 1,2014 and elected S corporation status at that date. Bristol has hadthe same 25 shareholders throughout its existence and has one classof stock. Bristol's S election will terminate if it:

10% of the shareholders vote to revoke the election

to purchase 10 shares

Allows a variation in the voting rights of the stock

Increases the number of shareholders to 125

On February 10, 2018, Ace Corporation, a new calendar yearcorporation, elected S corporation status and all shareholdersconsented to the election. There was no change in its shareholdersduring the current year. Ace met all eligibility requirements foran S corporation during the preelection portion of the year. Whatis the earliest date on which Ace can be recognized as an Scorporation?

February 10, 2018

January 1, 2019

February 10, 2019

January 1, 2018

In March of 2017 Frederick acquired an passenger automobile for$45,000 and used the automobile 85% for business. Themaximum depreciation deduction for 2017 is:

$3,160

$11,160

$8,928

$9,486

In August of 2017, Joseph acquires andplaces into services business equipment costing $300,000. Theequipment is classified as 5-year recovery property. No otheracquisitions are made during the year. Joseph elects to expense themaximum amount under Sec. 179. Joseph’s total deductions for theyear are

$60,000

$500,000

$100,000

$300,000

For the current tax year, VBN, an S Corporation distributes$100,000 to its sole shareholder, Raymond. His basis in the stockwas $140,000 before the distribution. VBN had once been a regular CCorporation and had remaining accumulated earnings and profits(E&P) from those years of $70,000. However, VBN has no balancein its accumulated adjustment account. How should the distributionof $100,000 be handled?

$100,000 as a taxable distribution

$70,000 as a taxable dividend, and $30,000 has a non taxablereturn of capital

$50,000 as a taxable dividend, and $100,000 as a non taxablereturn of capital

$70,000 as a taxable dividend; and $30,000 as a capital gain

Stahl, an individual who owns 100% of Talon, an S corporation,had a basis of $50,000 at the first of the year. During the yearTalon reported the following: Ordinary Loss of $10,000; Municipalinterest income of $8,000, Long term capital gain of $4,000; andLong term capital loss of $9,000. What was Stahl's basis in Talonat year end?

$56,000

$65,000

$53,000

$43,000

Gross Receipts of $70,000; Tax Exempt Interest Income of $4,000;Dividends of $10,000; Supplies Expense of $3,000; and UtilitiesExpense of $1,500. What amount is the S Corporation's ordinarytaxable income?

$75,500

$79,500

$70,000

$65,500

Bob and Sam each owned 50% of Lostalot, an S Corporation. Bob'sbasis is $30,000 and Sam's basis is $15,000. The corporation hasoperating loss for the current year of $50,000. Howmuch loss can each shareholder deduct in the current year assumingthey materially participate in the business:

Bob: $25,000; Sam: $15,000

Bob: $0; Sam: $0

Bob: $25,000; Sam: $25,000

Bob: $30,000; Sam: $15,000

Terra Corporation, a calendar-yeartaxpayer, purchases and places into service in 2017 machinery witha 7-year life that cost $650,000. The mid-quarter convention doesnot apply. Terra’s taxable income for the year before the Sec. 179deduction is $700,000. What is Terra’s total maximum depreciationdeduction related to this property?

$585,718

$521,345

$92,885

$500,000

Identify which of the following statements is false.

The PTI (previously taxed income) represents the balance ofundistributed net income which were already taxed.

The AAA balance can be negative, but the shareholder's basis inthe S corporation stock cannot be less than zero.

Tax exempt income increase the AAA and the basis of the Scorporation stock.

An S Corporation may or may not have accumulated Earnings andProfits

Elaine owns an unincorporated manufacturing business. In 2017,she purchases and places in service $600,000 of qualifying fiveyear equipment for use in her business. Her taxable income from thebusiness before any section 179 deduction is $100,000. Which of thefollowing statements is true?

Elaine cannot deduct any Section 179 deduction for 2017

Elaine can deduct $100,000 as a Section 179 deduction in 2017with a $400,000 carryover to next year.

Elaine can deduct $100,000 as a Section 179 deduction in 2017with a $500,000 carryover to the next year

Elaine can deduct $500,000 as a section 179 deduction in2017

Charles, an individual, owned 100% of the Alpha, an Scorporation. At the first of the year, Charles' basis in Alpha was$25,000. In the current year, Alpha realized ordinary income of$1,000; and a long term capital gain of $3,000. Alpha distributed$25,000 to Charles at the end of the year. What amount of the$25,000 is taxable to Charles?

$0

$7,000

$1,000

$25,000

At the beginning of year 1, Bill and Cindy form an S-corp andare equal shareholders, each gave $5,000 in exchange for stock.Cindy loaned the corp another $5,000 on June 30th of year. Thecorporation had an ordinary loss in its first year of $12,000 andordinary income in its second year of $15,000. Assume that allparties use a calendar based taxable year and that neither thepassive nor at-risk limitations are applicable. If theS-corporation also made a $12,000 distribution on Oct 30th of year1 (split equally between the shareholders as generally required bythe one-class of stock rule), then what are the tax impacts of thedistribution?

A. Both will recognize a short-term capital gain of $1,000 on thedistribution and each of their bases in the S-corporation’s stockis reduced to $0. Bill may not deduct any of the first year losswhile Cindy may deduct $5,000 of it.

B. Bill recognizes a short-term capital gain of $1,000 on thedistribution, his basis in stock is reduced to $0, and he cannotrecognize any of the first year loss. Cindy recognizes no gain onthe distribution, which reduces her basis in stock to $0 and herbasis in debt to $4,000. She may then deduct $4,000 of the firstyear loss, which reduces her debt basis to $0.

C. Bill recognizes $5,000 of the first year loss, which reduces hisbasis to $0. He then recognizes a $6,000 short-term capital gain onthe distribution. Cindy recognizes $6,000 of the first year loss,which reduces her stock basis to $0 and her debt basis to $4,000.She then recognizes a $2,000 capital gain on the distribution inexcess of her debt basis.

D. Bill recognizes $5,000 of the first year loss, which reduces hisbasis to $0. He then recognizes a $6,000 short-term capital gain onthe distribution. Cindyl recognizes $6,000 of the first year loss,which reduces her stock basis to $0 and her debt basis to $4,000.She then recognizes a $6,000 capital gain on the distribution,because debt basis cannot be reduced for distributions with respectto the stock of the S-corporation.

Weekly leaderboard

Home
Homework Help 3,900,000
Accounting 580,000
Start filling in the gaps now
Log in