12. S shareholders are allocated shares of income, gains and losses based on their number of shares of stock and period of time for which the stock is held. a. True b. False

13. Which of the following corporate tax levies are imposed on an S-Corporation? a. Corporate income tax b. Corporate alternative minimum tax c. Accumulated earnings tax d. Built-in-gains tax

14. Identify which of the following statements is false

a. Randy is a shareholder in an S-Corporation. His stock basis is $10,000 and his basis in a loan he made to the S-Corp is $3,000. Randys share of the corporations ordinary loss for the current year is $11,000. Ignoring the at-risk and passive activity limitations, Randy can deduct the loss in full

b. A shareholders S-Corporation stock basis will increase when the shareholder acts as guarantor on a corporate indebtedness

c. A shareholders ratable share of the S-Corps ordinary loss reduces the adjusted basis of his/her S-Corp stock. Once the basis of the stock is reduced to zero, any loss that remains reduces the basis of S-Corp debt that are owed to the shareholder

d. Debt basis is restored before stock basis