Question
During the current year, Marlene, Nancy and Olive formed a new S Corporation. Solely in exchange for stock, Marlene and Nancy contributed appreciated property, while
During the current year, Marlene, Nancy and Olive formed a new S Corporation. Solely in exchange for stock, Marlene and Nancy contributed appreciated property, while Olive contributed services. The exchanges of Marlene and Nancy will be nontaxable if:
Olive receives 30% of the stock | ||
Olive receives 80% of the stock | ||
Olive receives 15% of the stock | ||
Marlene and Nancy together receive 50% of the stock |
In June of 2018, Alice acquired her only machine for $30,000 to use in her business. The machine is classified as 5-year property. Alices maximum depreciation (including bonus) on the machine this year is:
$30,000 | ||
$12,000 | ||
$6,000 | ||
$18,000 |
Cactus Corporation, an S Corporation, had accumulated earnings and profits of $200,000 at the beginning of the tax year. Tex and Shirley each own 50% of the stock. During the current year Cactus had $100,000 of ordinary income and distributed $10,000 to Tex and $10,000 to Shirley. What is Tex's taxable income for the current year?
$10,000 | ||
$0 | ||
$100,000 | ||
$50,000 |
Bristol Corporation was formed as an S Corporation on January 1, 2014 and elected S corporation status at that date. Bristol has had the same 25 shareholders throughout its existence and has one class of stock. Bristol's S election will terminate if it:
10% of the shareholders vote to revoke the election | ||
to purchase 10 shares | ||
Allows a variation in the voting rights of the stock | ||
Increases the number of shareholders to 125 |
On February 10, 2018, Ace Corporation, a new calendar year corporation, elected S corporation status and all shareholders consented to the election. There was no change in its shareholders during the current year. Ace met all eligibility requirements for an S corporation during the preelection portion of the year. What is the earliest date on which Ace can be recognized as an S corporation?
February 10, 2018 | ||
January 1, 2019 | ||
February 10, 2019 | ||
January 1, 2018 |
In March of 2017 Frederick acquired an passenger automobile for $45,000 and used the automobile 85% for business. The maximum depreciation deduction for 2017 is:
$3,160 | ||
$11,160 | ||
$8,928 | ||
$9,486 |
In August of 2017, Joseph acquires and places into services business equipment costing $300,000. The equipment is classified as 5-year recovery property. No other acquisitions are made during the year. Joseph elects to expense the maximum amount under Sec. 179. Josephs total deductions for the year are
$60,000 | ||
$500,000 | ||
$100,000 | ||
$300,000 |
For the current tax year, VBN, an S Corporation distributes $100,000 to its sole shareholder, Raymond. His basis in the stock was $140,000 before the distribution. VBN had once been a regular C Corporation and had remaining accumulated earnings and profits (E&P) from those years of $70,000. However, VBN has no balance in its accumulated adjustment account. How should the distribution of $100,000 be handled?
$100,000 as a taxable distribution
$70,000 as a taxable dividend, and $30,000 has a non taxable return of capital
$50,000 as a taxable dividend, and $100,000 as a non taxable return of capital
$70,000 as a taxable dividend; and $30,000 as a capital gain
Stahl, an individual who owns 100% of Talon, an S corporation, had a basis of $50,000 at the first of the year. During the year Talon reported the following: Ordinary Loss of $10,000; Municipal interest income of $8,000, Long term capital gain of $4,000; and Long term capital loss of $9,000. What was Stahl's basis in Talon at year end?
$56,000 | ||
$65,000 | ||
$53,000 | ||
$43,000 |
Gross Receipts of $70,000; Tax Exempt Interest Income of $4,000; Dividends of $10,000; Supplies Expense of $3,000; and Utilities Expense of $1,500. What amount is the S Corporation's ordinary taxable income?
$75,500 | ||
$79,500 | ||
$70,000 | ||
$65,500 |
Bob and Sam each owned 50% of Lostalot, an S Corporation. Bob's basis is $30,000 and Sam's basis is $15,000. The corporation has operating loss for the current year of $50,000. How much loss can each shareholder deduct in the current year assuming they materially participate in the business:
Bob: $25,000; Sam: $15,000 | ||
Bob: $0; Sam: $0 | ||
Bob: $25,000; Sam: $25,000 | ||
Bob: $30,000; Sam: $15,000 |
Terra Corporation, a calendar-year taxpayer, purchases and places into service in 2017 machinery with a 7-year life that cost $650,000. The mid-quarter convention does not apply. Terras taxable income for the year before the Sec. 179 deduction is $700,000. What is Terras total maximum depreciation deduction related to this property?
$585,718 | ||
$521,345 | ||
$92,885 | ||
$500,000 |
Identify which of the following statements is false.
The PTI (previously taxed income) represents the balance of undistributed net income which were already taxed. | ||
The AAA balance can be negative, but the shareholder's basis in the S corporation stock cannot be less than zero. | ||
Tax exempt income increase the AAA and the basis of the S corporation stock. | ||
An S Corporation may or may not have accumulated Earnings and Profits Elaine owns an unincorporated manufacturing business. In 2017, she purchases and places in service $600,000 of qualifying five year equipment for use in her business. Her taxable income from the business before any section 179 deduction is $100,000. Which of the following statements is true? |
Elaine cannot deduct any Section 179 deduction for 2017 | ||||||||||||||
Elaine can deduct $100,000 as a Section 179 deduction in 2017 with a $400,000 carryover to next year. | ||||||||||||||
Elaine can deduct $100,000 as a Section 179 deduction in 2017 with a $500,000 carryover to the next year | ||||||||||||||
Elaine can deduct $500,000 as a section 179 deduction in 2017 Charles, an individual, owned 100% of the Alpha, an S corporation. At the first of the year, Charles' basis in Alpha was $25,000. In the current year, Alpha realized ordinary income of $1,000; and a long term capital gain of $3,000. Alpha distributed $25,000 to Charles at the end of the year. What amount of the $25,000 is taxable to Charles?
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