Solved by verified expert :1331. CHAPTER
12—S CORPORATIONS Question MC #37
On January 2, 2010, Tim loans his S corporation $10,000. By the end of 2010,
Tim’s stock basis is zero, and the basis in his note has been reduced to
$8,000. During 2011, the company’s operating income is $10,000. The company
also makes distributions to Tim of $8,000. Which statement is correct?
a.
Loan basis is now $10,000.
b. $8,000 LTCG.
c. Stock basis is $2,000.
d. $2,000 LTCG.
e. None of the above statements is
correct.
1332. CHAPTER
12—S CORPORATIONS Question MC #38
Randall owns 800 shares in Fabrication, Inc., an S corporation in Moss Hill,
Texas. In 2011, his basis in his stock is $30,000, before the adjustment for
this year’s losses. During 2011, Randall’s share of the corporation’s ordinary
loss is $20,000 and his share of its capital loss is $15,000. How much can
Randall deduct due to these losses?
a.
None.
b. $15,000 ordinary loss; $10,000
capital loss.
c. $17,143 ordinary loss; $12,857
capital loss.
d. $20,000 ordinary loss; $15,000
capital loss.
e. Some other amounts.
1333. CHAPTER
12—S CORPORATIONS Question MC #39
During 2011, Oxen Corporation incurs the following transactions.
Net income from operations
$100,000
Interest income from savings account
3,000
Long-term capital gain from sale of securities
10,000
Short-term capital loss from sale of securities
4,000
Oxen maintains a valid S election and does not distribute any assets (cash or
property) to its sole shareholder, Megan. As a result, Megan must recognize:
a.
Ordinary income of $103,000 and long-term capital gain of $5,000.
b. Ordinary income of $103,000,
long-term capital gain of $10,000, and $4,000 short-term capital loss.
c. Ordinary income of $108,000.
d. None of the above.
1334. CHAPTER
12—S CORPORATIONS Question MC #40
On January 1, Bobby and Alice own equally all of the stock of an electing S
corporation called Prairie Dirt Delight. The dirt company has a $60,000 loss
for a non-leap year. On the 200th day of the year, Bobby sells his one-half of
the stock to his son, Saul. How much of the $60,000 loss, if any, is allocated
to Bobby?
a.
$0.
b. $13,562.
c. $16,438.
d. $32,877.
e. None of the above.
1335. CHAPTER
12—S CORPORATIONS Question MC #41
A calendar year C corporation has a $41,000 NOL in 2010, but it elects S status
for 2011 and generates an NOL of $30,000 in 2011. At all times during 2011, the
stock of the corporation was owned by the same 10 shareholders, each of whom
owned 10% of the stock. Kris, one of the 10 shareholders, has an S stock basis
of $2,300 at the beginning of 2011. How much of the loss, if any, is deductible
by Kris in 2011?
a.
None.
b. $2,300.
c. $3,000.
d. $7,100.
1336. CHAPTER
12—S CORPORATIONS Question MC #42
An S corporation in Lawrence, Kansas has a recognized built-in gain of $110,000
and taxable income of $98,000. The company has an $8,000 NOL carryforward from
a C corporation year, and a $7,000 business credit carryforward from a C
corporation year. The built-in gains tax liability is:
a.
$0.
b. $24,500.
c. $28,700.
d. $31,500.
e. None of the above.
1337. CHAPTER
12—S CORPORATIONS Question MC #43
A cash basis calendar year C corporation in Athens, Georgia, has $100,000 of
accounts receivable on the date of its conversion to an S corporation on
February 14. By the end of the year, $70,000 of these receivables are
collected. Calculate any built-in gains tax, assuming that there is sufficient
taxable income.
a.
$0.
b. $10,500.
c. $24,500.
d. $35,000.
e. Some other amount.
1338. CHAPTER
12—S CORPORATIONS Question MC #44
Lott Corporation in Macon, Georgia converts to S corporation status in 2011.
Lott used the LIFO inventory method in 2010 and had a LIFO inventory of
$420,000 (FIFO value of $550,000). How much tax must be added to the 2010
corporate tax liability, assuming that Lott is subject to a 35% tax rate.
a.
$0.
b. $11,375.
c. $45,500.
d. $130,000.
e. None of the above.
1339. CHAPTER
12—S CORPORATIONS Question MC #45
Pepper, Inc., an S corporation in Norfolk, Virginia, has revenues of $400,000,
taxable interest of $380,000, operating expenses of $250,000, and deductions
attributable to the interest income of $140,000. What is Pepper’s passive
income penalty tax payable, if any?
a.
$0.
b. $40,895.
c. $185,000.
d. $380,000.
e. Some other amount.
1340. CHAPTER
12—S CORPORATIONS Question MC #46
Claude Bergeron sold 1,000 shares of Ditta, Inc., an S corporation located in
Concord, North Carolina, for $12,000. He had owned the stock for three years
and had a stock basis of $111,000 in the shares. Claude is single, and he is
the original owner of the § 1244 stock shares. Calculate the appropriate tax
treatment of any gain or loss.
a.
No gain or loss.
b. $50,000 LTCL; $49,000 ordinary
deduction.
c. $50,000 ordinary deduction; $49,000
LTCL.
d. $99,000 long-term capital loss.
e. None of the above.
