33) Which of the following is not a reason for a stockredemption?
A. desire by shareholders to reduce the corporate taxliability
B. No outside market exists for the stock.
C. Redemption of shares is a good corporate investment.
D. desire by remaining shareholders to retain control
34) Identify which of the following statements is true.
A. The S corporation rules were enacted to allow small corporationsto enjoy the nontax advantages of the corporate form of businesswithout being subject to the tax disadvantage of doubletaxation.
B. A partnership can elect to be taxed as a corporation under thecheck-the-box regulations. As a corporation, an S election can bemade.
C. For C corporations that desire to be taxed like a partnership,the S corporation rules provide a practical alternative for anexisting C corporation to obtain many of the tax benefits of beingtaxed as a partnership.
D. All are true.
35) Identify which of the following statements is true.
A. Shareholders who acquire stock in an S corporation after theelection date and prior to the election’s effective date mustconsent to the election.
B. S corporation consent by shareholders is binding on the currenttax year and all future tax years.
C. Only shareholders who own stock on the date an S election takeseffect must consent to the election.
D. All are false.
36) Which one of the following individuals or entities isineligible to be an S corporation shareholder?
A. Resident alien of the United States
B. A partnership where all of the partners are U.S.citizens
C. A voting trust where all of the beneficiaries are U.S.citizens
D. An estate
37) Cactus Corporation, an S Corporation, had accumulated earningsand profits of $100,000 at the beginning of 2008. Tex and Shirleyeach own 50% of the stock. Cactus does not make any distributionsduring 2008, but had $200,000 of ordinary income. In 2009, ordinaryincome was $100,000 and distributions were $100,000. What is Tex’sordinary income for 2009?
A. $50,000
B. $200,000
C. $100,000
D. $0
38) Matt and Joel are equal partners in the MJ Partnership. For thecurrent year ended December 31, the partnership has book income of$80,000, which includes the following deductions: (1) guaranteedpayments (salaries) to partners: Matt, $35,000; and Joel, $25,000;and (2) charitable contributions, $6,000. The book income amountdoes not include any sales of capital assets or Sec. 1231 assets orany tax-exempt income. Based on the above information, what amountshould be reported as ordinary income on the partnershipreturn?
A. $80,000
B. $140,000
C. $86,000
D. $60,000
39) Identify which of the following statements is true.
A. An election for an S corporation to use the Sec. 179 expensingelection is made by the corporation and not by itsshareholders.
B. The S corporation’s separately stated items are in general thesame ones that apply in partnership taxation.
C. An S corporation cannot claim a dividends-receiveddeduction.
D. All are true.
40) On the first day of the partnership’s tax year, Karen purchasesa 50% interest in a general partnership for $30,000 cash and shematerially participates in the operation of the partnership for theentire year. The partnership has $40,000 in recourse liabilitieswhen Karen enters the partnership. Partners share the economic riskof loss from recourse liabilities in the same way they sharepartnership losses. There is no minimum gain related to thenonrecourse liability. During the year the partnership incurs a$120,000 loss and a $20,000 increase in liabilities. How much ofthe loss can Karen report on her tax return for the currentyear?
A. $40,000
B. $60,000
C. $50,000
D. $30,000
41) On January 2 of the current year, Calloway and Taylorcontribute cash equally to form the CT Partnership. Calloway andTaylor share profits and losses in a ratio of 75% and 25%,respectively. The partnership’s ordinary income for the year was$40,000. Calloway received a distribution of $5,000 during theyear. What is Calloway’s share of taxable income for the year?
A. $10,000
B. $5,000
C. $20,000
D. $30,000
42) An electing S corporation has a $30,000 ordinary loss for thenonleap year. On January 1, Beverly and Sonya own equally all ofthe S corporation stock. On the 146th day of the year, Beverlygives her one-half of the S corporation stock to her daughterBecky. How much of the $30,000 ordinary loss is allocated toBeverly?
A. $15,000
B. $25,000
C. $6,000
D. $5,959
ScholarMatic: Explanation & Answer
Your ready answer from a verified tutor is just a click away for as little as $14.99
Click Order Now to get 100% Original Answer Customized to your instructions!
