Exam 18: Comparative Forms of Doing Business

An S corporation is not subject to the AMT, but its shareholders are in that the S corporation's AMT adjustments and preferences are passed through to them.

Kristine owns all of the stock of a C corporation which owns the following assets. Her adjusted basis for her stock is $270,000.Calculate Kristine's recognized gain or loss and classify it as capital or ordinary if she sells her stock for $500,000.

Thu and Tuan each own one-half of the stock of Wren, Inc., a C corporation.Each shareholder holds a stock basis of $175,000.Wren has accumulated E & P of $300,000.Wren's taxable income for the current year is $100,000, and it distributes $75,000 to each shareholder.Thu's stock basis at the end of the year is:

Which of the following is correct regarding the form for filing the annual Federal income tax return?

Match the following statements. -Partnerships

Melinda's basis for her partnership interest is $250,000.If she receives a cash distribution of $290,000, her recognized gain is $40,000 and her basis for her partnership interest is reduced to $0.Melinda is still a partner after the distribution.

With respect to special allocations, is the S corporation treated more like a partnership or a C corporation?

Arnold purchases a building for $750,000 which is going to be used by his wholly-owned corporation.Which of the following statements are correct?

Aubrey has been operating his business as a C corporation for the past 5 years.The corporation pays him a reasonable salary.The profits of the corporation, after paying Federal income tax, are distributed to him each year as a dividend.He is considering electing S status for his corporation in order to avoid double taxation.What factors should he consider assuming after-tax earnings will continue to be distributed to him?

Match the following statements. -Charitable contributions

Mr.and Ms.Nguyen's partnership owns the following assets. Adjusted Basis Fair Market Mr.and Ms.Nguyen each have a basis for their partnership interest of $135,000.Calculate their combined recognized gain or loss and classify it as capital or ordinary if they sell their partnership interests for $500,000.

Match the following statements. -Sale of corporate stock by the C corporation shareholders.

Match the following. -S corporation

The Net Investment Income Tax NIIT) is owed by both high income individuals and Corporations.

Each of the following can pass profits and losses through to the owners: general partnership, limited partnership, S corporation, and limited liability company.

If a C corporation has earnings and profits at least equal to the amount of a distribution, the tax consequences to the shareholders are the same, regardless of whether the distribution is classified as a dividend or as a stock redemption.

Match the following attributes with the different forms.A particular attribute may apply to more than one entity form. -S corporation

Techniques that can be used to minimize the current period tax liability include:

Match the following statements. -Regular tax rate

How can double taxation be avoided or reduced by owning assets outside a C corporation?