14 The purpose of the Schedule K-1 (Form 1120S) is to report a. Information for the AAA, PTI, and other adjustment accounts b. Any tax liability of the S corporation from excessive passive vestment income and built-in gains Schedule K (Form 1120S) Investment tax credit recapture for assets acquired by the corporation when c. The shareholder's allocation of the distributive items summarized on d. it was operated as a C corporation 15 An S corporation incurs a net operating loss of $25,000 in the current year and makes no distributions. Its sole shareholder, K, has a basis in the stock of $30,000 has the following impact: a. None, since no distributions were made and in a note receivable from the corporation of $20,000. The $25,000 b. Reduces the stock basis by $25,000 c. Reduces the note basis by $20,000 and the stock basis by $5,000 d. Reduces the note basis by $10,00 and the stock basis by $15,000 H is a newly incorporated S corporation in the business of growing Christmas trees from seedlings. Tax planning considerations are important to the owners. Which of the following choices is likely to be the most advantageous as a taxable year, if the owners expect net losses in the early years: 16 The calendar year The business year that coincides with that of the owners who hold a majority of the stock a. b. c. A business year that ends Jan. 31 if the owners file individually using the calendar year A fiscal year that ends with the S corporation's natural business year d