Acct 424 Midterm Pg 4 and Week 5 Quiz

Acct 424 Midterm Pg 4 and Week 5 Quiz - . Question: (TCO 8)...

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Unformatted text preview: . Question: (TCO 8) Which, if any, of the following can be eligible shareholders of an S corporation? Your Answer: A child, age 10. A resident alien. INCORRECT A voting trust. An estate of a deceased shareholder. All of the above can own stock CORRECT ANSWER Instructor Explanation: Points Received: 0 of 4 Comments: 2. Question: (TCO 8) What is the maximum number of shareholders allowed for S corporation eligibility? Your Answer: Instructor Explanation: Points Received: 4 of 4 Comments: 3. Question: (TCO 8) Which corporation is eligible to make the S election? Your Answer: Points Received: 4 of 4 Comments: 4. Question: (TCO 8) Which item is not separately stated on an S corporations Schedule K? Your Answer: Instructor Explanation: Points Received: 0 of 4 Comments: 5. Question: (TCO 8) Which, if any, of the following items decreases an S corporations AAA? Your Answer: Instructor Explanation: Options b. and d. have no effect on AAA, and option c. increases AAA. Points Received: 4 of 4 Comments: 6. Question: (TCO 8) Fred is the sole shareholder of an S corporation in Fort Deposit, Alabama. At a time when his stock basis is $10,000, the corporation distributes appreciated property worth $100,000 (basis of $10,000). There is no built-in gain. Freds taxable gain is: Your Answer: Instructor Explanation: There is a $90,000 corporate gain ($100,000 - $10,000) which passes through to Fred and increases his stock basis to $100,000 ($10,000 + $90,000). Then the distribution reduces his stock basis to zero ($100,000 $100,000). Fred recognizes a taxable gain of $90,000 and takes a $100,000 basis in the property. Points Received: 4 of 4 Comments: 7. Question: (TCO 8) You are given the following facts about a solely owned S corporation, and you are asked to prepare the shareholders ending stock basis. Increase in AAA $32,000 Increase in OAA 6,300 Payroll tax penalty 2,140 Beginning stock basis 39,800 Stock purchases 22,000 Tax-exempt interest 4,800 Insurance premiums paid (nondeductible) 2,700 Your Answer:...
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This note was uploaded on 04/22/2010 for the course ACCT ACCT424 taught by Professor Tracie during the Spring '10 term at DeVry Chicago O'Hare.

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Acct 424 Midterm Pg 4 and Week 5 Quiz - . Question: (TCO 8)...

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