Social Sciences > Final Exam Review > ACCT 553 - Final Exam (Chapter 12) fall 2022/2023 Q&A (All)

ACCT 553 - Final Exam (Chapter 12) fall 2022/2023 Q&A

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S corporations are treated as partnerships under state property laws. - ANSWER False Liabilities affect the owner's basis differently in an S corporation than they do in a partnership. - ANSWER Tru ... e Distributions of appreciated property by an S corporation are not taxable to the entity. - ANSWER False An S corporation cannot incur a tax liability at the corporation level. - ANSWER False Where the S corporation rules are silent, C corporation provisions apply. - ANSWER True A newly formed S corporation does not receive any tax benefit from an NOL incurred in its first tax year. - ANSWER False S corporation status allows shareholders to realize tax benefits from corporate losses immediately (assuming sufficient stock basis). - ANSWER True NOL carryovers from C years can be used in an S corporation year against ordinary income. - ANSWER False Tax-exempt income at the S corporation level flows through as taxable to the shareholder. - ANSWER False An estate may be a shareholder of an S corporation. - ANSWER True Most limited liability partnerships can own stock in an S corporation. - ANSWER False Most IRAs cannot own stock in an S corporation. - ANSWER True An S corporation cannot be a shareholder in another corporation. - ANSWER False If a resident alien shareholder moves outside the U.S., the S election is terminated. - ANSWER True An S election is made on the shareholder's Form 2553. - ANSWER True An S election made before becoming a corporation is valid only beginning with the first 12-month tax year. - ANSWER False For a new corporation, a premature S election may not be effective. - ANSWER True Only 51% of the shareholders must consent to an S election. - ANSWER False Persons who were S shareholders during any part of the year before the election date, but were not shareholders when the election was made, also must consent to an S election. - ANSWER True The termination of an S election occurs on the day after a corporation ceases to be a qualifying S corporation. - ANSWER False The passive investment income of an S corporation includes gains from the sale of securities. - ANSWER True An S corporation may not amortize its organization expenses. - ANSWER False Tax-exempt income at the corporate level flows through as exempt to S shareholders. - ANSWER True The Section 179 expense deduction is a Schedule K item on the Form 1120S. - ANSWER True Depreciation recapture income is a Schedule K item on the Form 1120S. - ANSWER False A per-day, per-share allocation of flow-through S corporation items must be used, unless the shareholder dispose [Show More]

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