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1. Harpo Corporation, an accrual method calendar year S Corporation accrued $10,000 of salary to an employee (a cash method 15 percent shareholder) during 2013,
- 1. Harpo Corporation, an accrual method calendar year S Corporation accrued $10,000 of salary to an employee (a cash method 15 percent shareholder) during 2013, but did not make payment until February 2014. The $10,000 payment by Harpo Corporation will be:
- a Disallowed as a deduction
- b Deductible in 2013
- c Deductible in 2014
- dNontaxabletotheemployee
- 2. Copper Industries, a calendar year corporation, wishes to make an S Corporation election for2014. The last day for filing a valid election for 2014 would be:
- aDecember31,2014
- b March 15, 2014
- c April 1, 2014
- dApril1,2014
- 3. Gopher Corporation (a S corporation) has income of $55,000 for the current year. Of such amount $45,000 was LTCG and $10,000 was ordinary income. The corporation paid a built-in gains tax of $5,000 on the sale of a capital asset, and has no accumulated earnings and profits. How much and what type of income should the shareholders report if Gopher Corp. made no distributions during the current year?
- a $40,000 LTCG; $10,000 ordinary income
- b $45,000 LTCG; $5,000 ordinary income
- c$40,000LTCG;$5,000ordinaryincome
- d$50,000ordinaryincome
- 4. How much and what type of income should the shareholders report if Gopher Corp. distributed$55,000 during the current year?
- a $45,000 LTCG; $10,000 ordinary income
- b $40,000 LTCG; $15,000 ordinary income
- c $40,000 LTCG; $10,000 ordinary income
- d$55,000dividends
- 5. Diamond Corporation (an S Corporation) has subchapter C accumulated earnings and profits of $20,000 and for the current year has gross receipts of $80000, of which $50,000 is interest income. Expenses incurred in the production of this passive income totaled $10,000. Diamond Corporations excess net passive income would be:
- a $11,000
- b $24,000
- c $30,000
- d$40,000
- 6. Loser Corporation (an S corporation) has an ordinary loss of $365,000 for 2014. A and B were the equal and only shareholders of the corporation from January 1 to January 31, 2014. On January 31, 2014, A sold his stock t C. What total loss is allocable to A?
- a $0
- b $15,000
- c $15,500
- d$16,000
- 7. Gardenia Corporation (an S corporation) had accumulated earnings and profits at the beginning of 2013 of $50,000. Ed and Fred are the equal and only shareholders of the corporation. Ordinary income during 2013 was $100,000, but no distributions were made. $50,000 was distributed on February 16, 2014, and ordinary income for 2014 was $50,000. What amount should Ed report as income for 2013?
- a $0
- b $25,000
- c $50,000
- d$100,000
- 8. What amount should Ed report as income for 2014?
- a $0
- b $25,000
- c $50,000
- d$75,000
- 9. Assuming the basis for Eds stock was $50,000 n January 1, 2013, what is the basis of Eds stock on January 1, 2015?
- a $50,000
- b $75,000
- c $100,000
- d$125,000
- 10. For the current year, the Peters Corporation (an S corporation) had income of $9,000 comprised of $6,000 of ordinary income and $3,000 from short-term capital gains. During the current year, $4,000 of the ordinary income was distributed to its sole shareholder. For the current year, the sole shareholder will report:
- a Ordinary income of $4,800
- b Ordinary income of $3,000; short-term capital gain of $1,200
- c Ordinary income of $6,000; short-term capital gain of $6,000
- d Ordinary income of $9,000
- 11. During the current year, Sundial Corporation (an S Corporation) has a $15,000 ordinary loss and a net long-term capital gain of $35,000, which results in net income of $20,000. Sundial Corporation made no distributions during the current year How much and what type of income should its shareholders report for the current year?
- a $0
- b $15,000 ordinary loss; $35,000 long-term capital gain
- c $20,000 long-term capital gain
- d$20,000dividendincome
- 12. For the current year, Shadow Corporation (an S Corporation) had a net capital loss (short-term) of $20,000. Its income excluding the capital loss was $100,000. What is the proper tax treatment of the $20,000 net capital loss?
- a Deduct from the taxable income
- b Pass through as $20,000 of short-term capital loss to shareholders
- c Carryback three years to offset capital gain
- dCarryforwardtooffsetfuturecapitalgainsinnextfiveyears.
- 13. An S corporation may:
- a Have both common and preferred stock outstanding
- b Have a corporation as a shareholder
- c File a consolidated tax return with a C corporation
- d Have as many as 100 shareholders.
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