1993 has 365 days 90 of which occurred before april 1

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Unformatted text preview: an election would have had to be made to obtain the same tax effects as in the provided choice. CPA-01959 Type1 M/C A-D 84. CPA-01959 ARE May 95 #21 Corr Ans: B PM#6 R 3-02 Page 46 Village Corp., a calendar year corporation, began business in 1990. Village made a valid S corporation election on December 5, 1993, with the unanimous consent of its shareholders. The eligibility requirements for S status continued to be met throughout 1994. On what date did Village's S status become effective? a. b. c. d. January 1, 1993. January 1, 1994. December 5, 1993. December 5, 1994. CPA-01959 Explanation Choice "b" is correct. Rule: In order to be effective for the current taxable year, the S corporation election must be made by the 15th day of the third month of the taxable year. If the election is made after that date, it becomes effective on the first day of the next taxable year, January 1, 1994, in this case. Choices "a", "c", and "d" are incorrect, per the...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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