CORPORATE TAX - FINAL EXAM
QUESTIONS AND ANSWERS
S-corporation status is only a _____ Income satus - Answer-Federal
What are the 5 requirements to be an S-Corp? - Answer--US not Foreign
-Has no more than 100 Shareholders
-cannot be corporations, only individuals, estates and certain trusts.
-Does not have a non resident alien shareholder
-issues only 1 class of stock.
True or False - 1 shareholder can consent to become an S-Corporation with form 2553 -
Answer-False - All shareholders must consent to the election
What is the percentage of shareholders needed to kill an S-Corporation? - Answer-51%
If your S status is lost? How long do you have to wait to apply again? - Answer-5 Years
You are allowed to apply sooner under 2 conditions - Answer-1. If there is more than
50% change in ownership.
2. The termination was out of your control
What accounting methods is an S-Corporation allowed to use? - Answer-Cash, Accrual,
or Hybrid Method
True or False - corporations report results of operations in a 2 step process similar to
partnerships. - Answer-True -Non-separately stated items are netted and non ordinary
items are not
True or False - Shareholders can be employees of an S Corporation - Answer-True
Where does each shareholder report their share of taxable income? - Answer-On their
individual tax returns.
True or False - S corps can make special allocations - Answer-False - S-Corps cannot
make special allocations like partnerships.
Loss limitations for an s corporation is limited to: - Answer-Stock Basis and Loan Basis
After termination of the S-Corp, what happens to the loss carryover? - Answer-Any loss
carryover not used at the end of 1 year after termination is lost forever
What are the 2 methods for allocating income and losses to shareholders? - Answer-
Per Day Method and Per Books Method
QUESTIONS AND ANSWERS
S-corporation status is only a _____ Income satus - Answer-Federal
What are the 5 requirements to be an S-Corp? - Answer--US not Foreign
-Has no more than 100 Shareholders
-cannot be corporations, only individuals, estates and certain trusts.
-Does not have a non resident alien shareholder
-issues only 1 class of stock.
True or False - 1 shareholder can consent to become an S-Corporation with form 2553 -
Answer-False - All shareholders must consent to the election
What is the percentage of shareholders needed to kill an S-Corporation? - Answer-51%
If your S status is lost? How long do you have to wait to apply again? - Answer-5 Years
You are allowed to apply sooner under 2 conditions - Answer-1. If there is more than
50% change in ownership.
2. The termination was out of your control
What accounting methods is an S-Corporation allowed to use? - Answer-Cash, Accrual,
or Hybrid Method
True or False - corporations report results of operations in a 2 step process similar to
partnerships. - Answer-True -Non-separately stated items are netted and non ordinary
items are not
True or False - Shareholders can be employees of an S Corporation - Answer-True
Where does each shareholder report their share of taxable income? - Answer-On their
individual tax returns.
True or False - S corps can make special allocations - Answer-False - S-Corps cannot
make special allocations like partnerships.
Loss limitations for an s corporation is limited to: - Answer-Stock Basis and Loan Basis
After termination of the S-Corp, what happens to the loss carryover? - Answer-Any loss
carryover not used at the end of 1 year after termination is lost forever
What are the 2 methods for allocating income and losses to shareholders? - Answer-
Per Day Method and Per Books Method
