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linda_us, Master's Degree
Category: Multiple Problems
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Mary purchased 40 percent of an S corporation on February 28

Customer Question

Mary purchased 40 percent of an S corporation on February 28 of the current year and sells a 20 percent interest on November 30. If the corporation reports $10,000 of income for the year, what income does it report on Mary’s Schedule K-1. (Points : 5)
$7,534
$3,014
$4,000
$3,184
None of the above


2. An S election terminates (Points : 5)
when a shareholder dies.
when there is a nonresident alien shareholder
when the S corporation invests in a C corporation
when an S corporation has excess passive income


3. Which of the following is not a potential S corporation tax? (Points : 5)
The personal holding company tax
The built-in gains tax
The LIFO recapture tax
The net passive investment income tax


4. Greg and Samantha plan to establish a business in which they will both materially participate. They are both in the 35% marginal tax bracket. Although they expect the business to be very successful in the long-run, they project losses of approximately $100,000 for each of the first five years. Due to potential environmental concerns, limited liability is very important for the owners. Which form of business entity should they select considering both tax and nontax factors? (Points : 5)
General partnership
C corporation
S corporation
It makes no difference; any of the above should satisfy Greg and Samantha.


5. Corbin has a $15,000 basis in his 50 percent ownership in an S corporation and lent the corporation $5,000 last year. The corporation has $30,000 of other debt. This year the corporation reported a $100,000 loss. How much of this loss may Corbin deduct? (Points : 5)
$15,000
$20,000
$35,000
$50,000


6. Duet Co. is a calendar year S Corporation owned equally by Patricia and Scott. Duet Co. had taxable income of $40,000 for the current year. Patricia and Scott each received distributions from Duet Co. of $5,000. What is Patricia’s taxable income from Duet Co. for the current year? (Points : 5)
0
$5,000
$20,000
$25,000
$44,000
Submitted: 1 year ago.
Category: Multiple Problems
Expert:  FiveStarLaw replied 1 year ago.
Hello,


Thank you for your question

I am working on your answer. One moment please.
Expert:  FiveStarLaw replied 1 year ago.
Unfortunately I am not certain of the answers so I shall opt out to allow another expert to assist you. Please do not respond to me as that will delay your answer.
Customer: replied 1 year ago.

I don't need any answers. I have already answered these questions. Thank you though.

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