1. What is Alexanders net gain or loss on the liquidation of his 100 percent interest in an S corporation if the corporation distributes the following three assets to him in exchange for his stock: Asset FMV Adj. Basis Inventory $20,000 $13,000 7,000 Machines $50,000 $60,000 (10,000) Building $100,000 $75,000 25,000 170,000 148,000 22,000 Prior to any distributions, Alexanders basis in his S corporation interest was $160,000. ($12,000) ($22,000) $10,000 $22,000 None of the above 2. Corbin has a $15,000 basis in his 50 percent ownership in an S corporation and lent the corporation $5,000 last year. The corporation has $30,000 of other debt. This year the corporation reported a $100,000 loss. How much of this loss may Corbin deduct? (Points : 5) $15,000 $20,000 $35,000 $50,000 Basis 15,000 Ownsership 50% Lent 5,000 Corporation Debt 30,000 15,000 Loss 100,000 (50,000) 3. The accumulated adjustment account (Points : 5) is a shareholder account. can be reduced below zero by an excess distribution. determines when there is a tax-free distribution during the post-termination period. is important in applying loss limitation rules. 4. Which of the following is not a requirement to make an S election? (Points : 5) Maximum 100 shareholders One class of stock Shareholders must be citizens It must be a domestic corporation 5. An S election terminates (Points : 5) when a shareholder dies. when there is a nonresident alien shareholder when the S corporation invests in a C corporation when an S corporation has excess passive income 6. Which of the following does not affect the basis of S corporation stock? (Points : 5) Tax-exempt income Nondeductible expenses Charitable contributions Capital gains All affect stock basis 7. The S corporation income tax return includes all of the following except (Points : 5) a Schedule K. an M-1 Schedule. a retained earnings reconciliation. a reconciliation of the AAA account. 4. Walter owns and manages his 50 percent interest in a rental apartment complex. His AGI for the current year is $110,000 excluding his portion of the $70,000 loss from the apartment complex. What is his loss carryover? (Points : 1) 0 $15,000 $25,000 $35,000