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Exam 15: S Corporations

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Question 41

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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?

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

E) All of the above
F) A) and B)

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Question 42

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Amit, Inc., an S corporation, holds an AAA balance of $614,000 at the beginning of the tax year.During the year, the following items occur. E)Some other amount.

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Question 43

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Tax-exempt income at the corporate level flows through as exempt to S shareholders.

Which corporation is eligible to make the S election?

Donna and Mark are married and file a joint return reporting taxable income of $350,000.Donna owns a qualified S corporation that is not a specified service business.During the year, Donna incurs qualified business income of $75,000.Donna's share of wages paid by the business is $20,000.Assuming there is no qualified property factor, calculate her 20% QBI deduction.

An S corporation is subject to the following taxes) .

The passive investment income of an S corporation includes net capital gains from the sale of stocks and securities.

Most limited liability partnerships can own stock in an S corporation.

Fred is the sole shareholder of an S corporation in Fort Deposit, Alabama.At a time when his stock basis is $20,000, the corporation distributes appreciated property worth $100,000 basis of $20,000) .Fred's taxable gain is:

You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis.

Tax-exempt income at the S corporation level flows through as taxable to the shareholder.

An S corporation recognizes a on any distribution of appreciated property.

Depreciation recapture income is a separately, nonseparately) computed amount.

A distribution from the other adjustment account OAA) is not taxable to an S shareholder.

The exclusion of on the disposition of small business stock is/is not) available for S stock.

This year, Jiang, the sole shareholder of a calendar year S corporation, received a distribution of $17,000.On December 31 of the prior year, his stock basis was $3,000.The corporation earned $12,000 ordinary income during the year.It has no accumulated E&P.Which statement is correct? Ignore the 20% QBI deduction.

Oxen Corporation incurs the following transactions. Oxen maintains a valid S election and does not distribute any assets cash or property) to its sole shareholder, Megan.As a result, Megan must recognize ignore 20% QBI deduction) :

An S shareholder's basis is increased by stock purchases and capital contributions.

The Section 179 expense deduction is a Schedule K item on the Form 1120S.

Liabilities affect the owner's basis differently in an S corporation than they do in a partnership.