An electing small business trust is an eligible

14. An Electing Small Business Trust is an eligible shareholder for an
S corporation.
*a. True
b. False
15. Corporation X began operations on January 1, 2013, and met all of
the requirements to qualify as an S corporation. On March 15, 2013, X
filed a valid Form 2553 to elect S corporation status. X cannot be
treated as an S corporation until 2014.
16. Billy Johnson sold his stock in Corporation Z, an S corporation, to
Corporation N, a C corporation. This will not terminate Z's status as
an S corporation.

17. Any incorporated business can elect to be taxed as an S
corporation.
18. Since S corporations are corporations, they are subject to the
accumulated earnings tax, personal holding company tax, and alternative
minimum tax.
a. True
*b. False
19. A corporation cannot elect S status if it has as a shareholder a
corporation or partnership.
20. A corporation that wants to elect and retain S corporation status
can at no time have 100 shareholders.
21. All members of the same family are treated as one shareholder in an
S corporation.
22. A corporation cannot qualify as an S corporation if it has more
than one class of stock.
*a. True
b. False
23. A corporation eligible to be an S corporation is automatically
treated as such by the IRS.
24. A corporation's S status can only be terminated by having all
shareholders revoke the S election.

25. Once filed, an S corporation cannot rescind a revocation.
a. True
*b. False
26. An S corporation may accidentally revoke its S status by either no
longer qualifying as a small business corporation or by having
accumulated E&P and excess passive investment income for three
consecutive years.
27. The IRS is more likely to accept an S corporation's request to
disregard an inadvertent termination if it believes that the
terminating event was not reasonably within the corporation's control
and was not part of a plan to terminate the corporation's S status.
28. Unlike the partnership rules, an S corporation is not allowed to
specially allocate items of income, deduction, gain and loss among its
shareholders.
29. The decision of whether to deduct or take a credit for foreign
income taxes paid or accrued by the S corporation is made by the S
corporation.
a. True
*b. False