Sarah is a shareholder in an S Corporation. This is the third year in which she has been a shareholder. She purchased her stock (1,000 shares for $15.00 per share). Sarahs basis at the end of year two was $17,500. This year Sarah received a distribution of $10,000. The corporation suffered a loss this year; Sarahs share of the ordinary loss is $9,500. How much of the $9,500 ordinary loss will Sarah be allowed to deduct on her personal return this year?

a) $ 9,500

b) $ 7,500

c) $ 0

d) $10,000

Ann is the trustee appointed by her uncles will. The trust closed on January 31, 2022. It had $950 of gross income for January of 2022. The trust has existed since January 15, 2021 and is on a calendar year. Which return(s) will Ann be required to file and when is she required to file?

a) File a 2021 Form 1041 for the entire period (through January 31, 2022).

b) File a 2021 Form 1041 for the period ending December 31, 2021, and a 2022 Form 1041 for the short one-month period in 2022 by the 15th day of the fourth month following the close of the trusts tax year.

c) File two 2021 Form 1041s (calendar year 2021 and the short one-month period in 2022). Each must be filed by the 15th day of the fourth month after the close of the trusts tax year.

d) File a separate 2021 Form 1041 for each tax year (calendar 2021 and the one-month period in 2022) by April 15, 2022.

EZ Trust is on a calendar-year tax year. Fred, the new trustee for EZ, forgets to file Form 1041 by April 15 as required and does not file an extension. He finally files EZs Form 1041 on June 30 and issues Schedule K-1s to the two beneficiaries. EZ Trust owes $5,000 in taxes. What amount of penalty(ies) will EZ owe to IRS? Must any additional forms be filed?

a) Since the extension is automatic, there will only be a $75 late payment penalty.

b) There will only be a late filing penalty of $750 and Form 2210 must also be filed.

c) There will be a late filing penalty of $280 and a late payment penalty of $75. Form 2210 must also be filed.

d) There will be a late filing penalty of $750, a late payment penalty of $75, and a penalty of $560 for not providing a Form K-1 to each beneficiary on or by the due date of Form 1041. Form 2210 must also be filed. 34.