1. 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:
   1. a Disallowed as a deduction
   2. b Deductible in 2013
   3. c Deductible in 2014
   4. dNontaxabletotheemployee
2. 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:
   1. aDecember31,2014
   2. b March 15, 2014
   3. c April 1, 2014
   4. dApril1,2014
3. 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?
4. a $40,000 LTCG; $10,000 ordinary income
   1. b $45,000 LTCG; $5,000 ordinary income
   2. c$40,000LTCG;$5,000ordinaryincome
   3. d$50,000ordinaryincome
5. 4. How much and what type of income should the shareholders report if Gopher Corp. distributed$55,000 during the current year?
   1. a $45,000 LTCG; $10,000 ordinary income
   2. b $40,000 LTCG; $15,000 ordinary income
   3. c $40,000 LTCG; $10,000 ordinary income
   4. d$55,000dividends
6. 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:
   1. a $11,000
   2. b $24,000
   3. c $30,000
   4. d$40,000
7. 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?
   1. a $0
   2. b $15,000
   3. c $15,500
   4. d$16,000
8. 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?
   1. a $0
   2. b $25,000
   3. c $50,000
   4. d$100,000
9. 8. What amount should Ed report as income for 2014?
   1. a $0
   2. b $25,000
   3. c $50,000
   4. d$75,000
10. 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?
    1. a $50,000
    2. b $75,000
    3. c $100,000
    4. d$125,000
11. 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:
    1. a Ordinary income of $4,800
    2. b Ordinary income of $3,000; short-term capital gain of $1,200
    3. c Ordinary income of $6,000; short-term capital gain of $6,000
    4. d Ordinary income of $9,000
12. 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?
    1. a $0
    2. b $15,000 ordinary loss; $35,000 long-term capital gain
    3. c $20,000 long-term capital gain
    4. d$20,000dividendincome
13. 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?
    1. a Deduct from the taxable income
    2. b Pass through as $20,000 of short-term capital loss to shareholders
    3. c Carryback three years to offset capital gain
    4. dCarryforwardtooffsetfuturecapitalgainsinnextfiveyears.
14. 13. An S corporation may:
    1. a Have both common and preferred stock outstanding
    2. b Have a corporation as a shareholder
    3. c File a consolidated tax return with a C corporation
    4. d Have as many as 100 shareholders.

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 d. Nontaxable to the employee 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: a. December 31, 2014 b. March 15, 2014 c. April 1, 2014 d. April 1, 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. $40,000 LTCG; $5,000 ordinary income d. $50,000 ordinary income 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. $55,000 dividends 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 Corporation's 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 8. 9. 10. 11. 12. 13. 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 What amount should Ed report as income for 2014? a. $0 b. $25,000 c. $50,000 d. $75,000 Assuming the basis for Ed's stock was $50,000 n January 1, 2013, what is the basis of Ed's stock on January 1, 2015? a. $50,000 b. $75,000 c. $100,000 d. $125,000 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 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. $20,000 dividend income 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 d. Carry forward to offset future capital gains in next five years. 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