Which type of shareholder is eligible to hold stock in S corporations?

$$ Alien individuals who are U$.$S$.$ residents or are married to a U$.$S$.$ citizen

$$ Domestic partnerships that have elected to be treated as a corporation

$$ C corporations with fewer than $100$ shareholders

$$ Domestic insurance companies

Which type of event will cause an S corporation election to terminate?

$$ A tax$-$exempt public charity inherits the S corporation stock from a wealthy donor.

$$ A stock transfer by one shareholder causes the S corporation to have $51$ shareholders.

$$ A shareholder who is a U$.$S$.$ citizen moves out of the country.

$$ AC corporation holds the S corporation stock for one day out of the year.

What is included in the calculation of ordinary income for an S corporation?

$$ Rent expense

$$ Capital gain

$$ Owner withdrawal

$$ Dividend income

What is a separately stated item of an S corporation?

$$ Cost of goods sold

$$ Sales revenue

$$ Employee compensation

$$ Tax$-$exempt interest income

What is the limitation on an S corporation shareholder's deduction for their share of corporate losses?

$$ Basis of the shareholder's stock plus the basis of any debt from the shareholder to the corporation

$$ Current fair market value of the shareholder's stock

$$ Fair market value of the shareholder's stock when it was first acquired

$$ Basis of the shareholder's stock plus any corporate debt guaranteed by the shareholder

Which item is separately stated for an S corporation shareholder?

$$ Gross revenue

$$ Commissions

$$ Wages

$$ Dividends

What is an adjustment that is made annually to a stockholder's stock basis?

$$ Increase for the shareholder's share of nondeductible expenses

$$ Decrease for distributions during the year

$$ Decrease for the shareholder's share of ordinary business income

$$ Increase for distributions during the year

An individual owns $100\%$ of an S corporation and is also owed $$100,000$ by the corporation at the start of the year. The stock basis at the start of the year is $$300,000$

During the year, the corporation has a $$50,000$ operating loss.

What is the individual's debt basis at the end of the year?

$$ $$250,000$

$$ $$150,000$

$$ $$100,000$

$$ $$50,000$

A corporation expects to have $$500,000$ in taxable income, but wants to lower its tax bill. To do this, they donate a painting that the corporation has owned for the last $10$ years to a local nonprofit museum, so that the corporation may deduct a charitable contribution.

The museum intends to display the painting to the public as part of its collection. The painting originally cost the corporation $$20,000$ and is now valued at $$50,000.$

What is the corporation's new expected taxable income?

$$ $$420,000$

$$ $$465,000$

$$ $$480,000$

$$ $$450,000$

How may S corporation shareholders increase their ability to deduct a corporate loss?

$$ By selling assets to the corporation at fair market value

$$ By loaning funds to the corporation

$$ By guaranteeing a debt owed by the corporation

$$ By receiving a cash distribution from the corporation

Which election may be made to allocate an S corporation's income based on its accounting methods following the termination of the S corporation election?

$$ Changing the corporation's tax year

$$ Making a deemed distribution out of accumulated earnings and profits

$$ Using the specific identification method to allocate income

$$ Changing the corporation's accounting method

How does a limited partnership $($LP$)$ differ from a general partnership?

$$ Limited partners of the LP can lose more than the partner's investment.

$$ General partners of the LP number two or more.

$$ Limited partners of the LP are inactive in the partnership's management.

$$ General partners of the LP automatically have limited liability.

In which type of business entity do all partners have the right to participate in the management of the business but also face personal liability?

$$ Limited partnership

$$ General partnership

$$ C corporation

$$ Limited liability corporation

What is true regarding the taxation of a partnership?

$$ The partnership is subject to two layers of income tax.

$$ The partnership's gains and losses are allocated among the partners.

$$ The partnership pays a $15\%$ marginal tax rate on the first $$50,000$ of income.

$$ The partnership is assigned a tax year by the IRS.

If a mortgaged property is contributed to a partnership, how will it affect the contributing partners' basis?

$$ The contributing partner's basis will increase by the amount of the debt relief and increase by their share of the mortgage.

$$ The contributing partner's basis will decrease by the amount of the debt relief and increase by their share of the mortgage.

$$ Each partner's basis will be decreased by their ownership proportion of the mortgage.

$$ Each partner's basis will decrease by the total amount of the mortgage.