which one of the following conditions would prevent a corporation from qualifying as an S corporation in the current year?
(D) a corporation that has nonresident aliens as shareholders
what qualifications are necessary for an electing small business trust to be eligible to hold stock in an S corporation?
(D) all beneficiaries of a trust must be individuals, estates, or charitable organizations that are eligible to be S corporation shareholders, and the trust must not have an interest acquired by purchase. A specific election to be treated as an electing s
which of the following entities is ineligible to be an S corporation shareholder?
(A) charitable remainder annuity trust
all of the following entities are allowed to elect S status except a
(A) Domestic international sales corporation (DISC)
which one of the following is not a requirement to make an S corporation election?
(A) the corporation must have no trusts as shareholders
which of the following will prevent a corporation from qualifying as an S corporation in the current year?
(B) having a partnership as a shareholder
which of the following tax years may an S corporation use for its taxable year beginning after 1986 (assuming no business purpose exists for another year and assuming an election is not made under Sec. 444)?
(A) a calendar year
what is the maximum number of shareholders allowable for eligibility as an S corporation in the current year?
(D) 100
Tau Corporation
(C) November 1 of next year
Mary and Paul are plumbers
(C) Mary and Paul have until March 15, Year 2, to make a valid election for Year 2
Lindal Corporation
(D) no limit on passive investment income
which of the following items is not a separately stated item for Form 1120S shareholders?
(C) depreciation
an S corporation may deduct
(D) compensation of officers
in computing the non-separately stated income or loss of an S corporation, which of the following items can be deducted by the corporation?
(D) corporate organizational costs
Towne Corporation
(D) T, $109,200; A, $36,800
What is the nonseparately stated income amount of an accrual basis, calendar year S corporation with the following items?
(A) $63,000
At the beginning of the year, W, an S corporation, was owned equally by two individual shareholders, D and K
(D) ordinary income: $91,500; capital gain: $45,750; charitable contribution: $13,725
Mr. Star
(A) the amount of the deduction for depletion that is more than the basis of the property being depleted
Krista acquires stock in an S corporation by reason of inheritance
(C) basis: $75,000; IRD: $25,000
Milam, Inc.
(C) $28,000
Which of the following is a characteristic of a Qualified Subchapter S Subsidiary (QSub)?
(C) all assets, liabilities, and items of income, deduction, and credit are treated as if the belong to the S Corporation's parent corporation
Corporation D, a calendar year S corporation, was formed January 1, Year 1
(A) $90,000
Jen and Jerry
(B) $15,123
Maui Corporation
(B) $4,537
With regard to S corporations and their shareholders, the "at-risk" rules applicable to losses
(D) apply at the shareholder level rather than the corporate level
Bill and Ken own Tax, Inc.
(B) $60,000
Sunnie owns 50% of the shares of Corporation H
(C) $7,000
Jasper owns 50% of Blaster, Inc.
(C) $500
What amount of Day's losses may be deducted by B in Year 1, and what amount of Day's losses can be carried over by B in Year 2?
(C) deducted: $13,000; carryover: $5,250
What is B's basis in his Day Corporation stock and his basis in the indebtedness he is owed by Day Corporation at the end of Year 1?
(B) stock: $0; indebtedness: $0
Mr. Sharp
(B) a capital gain
Wiggins is the sole shareholder of the Tamale Corporation
(C) $25,000
the books and records of F, a calendar year S corporation since 1983
(A) $0
JLK Corporation
(D) ordinary income: $13,000; capital gain: $27,000
Naples Corporation
(D) $0
Jenny Corporation
(B) $10,000
Pages, Inc.
(B) $45,000 AAA, $15,000 dividend, $20,000 return of capital, zero capital gains
XYZ Corporation (S Corporation)
(C) $2,500
Rap, Inc.
(B) $32,000
in which of the following instances involving the current year will an S corporation be subject to tax?
(C) PQR sold an asset at a gain. The asset had a value in excess of basis when PQR elected S corporation status 4 years ago. PQR began operations 5 years ago.
If an S corporation recognizes a built-in gain and pays tax on it, the shareholders
(D) report their share of the individual gains reduced by the taxes paid by the S corporation that are attributable to such gains
which of the following corporations may be subject to the built-in capital gains tax?
(B) G-corp., established in 2010 as a C corporation, elected to be an S corporation on April 15, 2017
Prail Corporation
(B) $17,500
Bligh, Inc.
(B) $22,750
T, an S corporation, is liable for the tax on its excess net passive income for the current year of $10,000. What is the amount of the tax?
(C) $3,500
all the following factors serve to determine whether an S corporation may be subject to the tax on excess net passive income except
(C) more than 50% of loans payable are not at-risk
Real Corporation
(B) $5,833
which of the following is not information required to be included in an S corporation income tax return?
(C) each shareholder's adjusted basis in the corporation's stock
for the current year, an S corporation does not have to make estimated tax payments with respect to which one of the following taxes?
(B) alternative minimum tax
which one of the following situations does not constitute a transfer that comes with the gift tax statutes?
(C) an individual creates a trust giving income for life to his wife and providing that, at her death, the corpus is to be distributed to his son. The individual receives the right to revoke the transfer at any time without the consent of the other partie
Raff created a joint bank account for himself and his friend's son, Dave. There is a gift to Dave when
(C) Dave draws on the account for his own benefit
In which of the following circumstances would a gift tax return be due?
(A) check for $26,000 to son
all the following statements related to qualified transfers for gift tax purposes are true except
(D) a payment made directly to an individual to reimburse him for his medical expenses is a qualified transfer
During the current year, Mr. and Mrs. X made joint gifts to their son of the following items
(B) $93,000
which one of the following represents taxable gifts?
(A) none of the choices is a taxable gift
on December 1 of last year, Sam gave his son, Stan, a taxable gift of land with a fair market value of $15,000 on the date of the gift
(D) gift tax value: $15,000; Stan's basis: $11,400
On May 24, 2017, David gave his brother Larry one share of ABC stock, which was traded on an exchange
(B) $97.00
When her father died, Mary, age 25, inherited an income interest for life in a $100,000 trust
(B) Mary's interest: $97,518; Steve's interest: $2,482
Joe is contemplating retirement and decided to simplify his financial statement by disposing of some assets
(A) $75,000
During the current year, Mr. C, a US citizen, made the following gifts
(C) $178,000
Jean Camp contributed to the National Wildlife Foundation
(A) $0
Blum
(C) $14,000
During the current year, Nancy, who is single, made the following gifts
(B) $10,000
Donald is a tax return preparer
(C) Jody must file a gift tax return but she will not owe tax because of the unified credit
Mary made the following gifts in the current year
(C) $100,000
Larry won $10 million at a casino 2 years ago and invested in mutual funds
(C) $108,000
Blake transferred a corporate bond
(D) $0
Jim and Nina
(B) $75,000
During the current year, Mr. Jones made gifts to his son of the following items
(C) $40,000
all the following statements concerning gift splitting are true except
(C) for gift tax purposes, a husband and wife must file a joint income tax return to qualify for the gift splitting benefits
Jack and Jill
(C) Jack and Jill must file separate gift tax returns and report one-half of each gift on each return before applying the $14,000 annual exclusions
During the following year, Warren made the following gifts
(C) $22,000
Under the unified rate schedule
(C) lifetime taxable gifts and transfers at death are taxed on a cumulative basis
Mr. C, who is single and a US citizen, made the following gifts in the current year
(A) $16,000
Rose and Lily
(D) [$345,800 + 40%($5,486,000)] - $2,141,800
Spencer, a single taxpayer
(B) $117,000
Sharon made a gift of land with a fair market value of $4,504,000 to her daughter in 2017
(B) $1,986,000
Vega
(B) April 15, Year 2
Mr. Smith
(C) April 15, Year 2
for transfers by gift during the current year, a taxpayer must file a gift tax return for which of the following?
(D) a transfer of $20,000 to a son for which one's spouse has agreed to gift-splitting
a decedent's gross estate includes the value of all property to the extent of the decent's interest in the property at the time of death. Which one of the following items is not included in the gross estate?
(D) outstanding dividends declared to decedent after the date of death
Chester is preparing for the estate tax return, Form 706, for his deceased brother John
(A) real estate that will be passed to John when his parents die
Which of the following items of property would be included in the gross estate of a decedent who died in the current year?
(B) 1 and 3
Mr. X died on June 30 of the current year
(C) $375,000
Mr. X died on September 24 of the current year
(C) $515,000
Mr. Good died on April 15 of the current year
(D) $620,000
Adam and Burr
(D) excludable from Burr's gross estate
all of the following statements about the alternative valuation date for valuing property included in the decedent's gross estate are true except
(B) property affected by mere lapse of time is valued at date of death and includes those properties affected by the time value of money
if the executor of a decedent's estate elects the alternative valuation date and none of the property included in the gross estate has been sold or distributed, the estate assets must be valued as of how many months after the decedent's death
(B) 6
Mr. Ash died on June 15 of the current year
(C) $5,950,000
With regard to the federal estate tax, the alternative valuation date
(D) can be elected only if its use decreases both the value of the gross estate and the sum of the estate tax and the generation skipping transfer tax (reduced by any allowable credits)
which of the following is not an allowable deduction against a decedent's gross estate?
(C) penalty incurred as a result of a late payment of the federal estate tax
ordinary and necessary administration expenses paid by the fiduciary of an estate are deductible
(C) on the fiduciary income tax return only if the estate tax deduction is waived for these expenses
Charlie Brownish
(C) $5,740,000
Alan Curtis
(B) $375,000
B died in the current year
(C) $103,500
Form 706, was filed for the estate of John Doe in 2017
(c) martial deduction
what amount of the decedent's taxable estate is effectively tax free in 2017 if the minimum applicable credit amount is taken?
(D) $5,490,000
Kay died in 2017
(B) $721,000
Dinah Mite
(C) $200,000
The applicable credit amount that his estate will subtract from tentative estate tax due is
(D) $2,141,800
John paid gift taxes during his lifetime of $266,500
(A) $133,500
an extension of time to pay the estate tax may be granted if the executor can show "reasonable" cause as to why the estate is unable to pay the tax in a timely manner. all the following are illustrations of "reasonable cause" except
(D) payment of the estate taxes would require the liquidation of more than 50% of the assets of the estate
which one of the following rules does not apply to the filing of the estate tax return of a US citizen?
(D) for 2017, the value of the gross estate must be over $5,000,000
Charlie Grey
(B) March 15, 2018
the executor of an estate may request an extension of time to pay the estate tax. all the following statements are true except
(C) the IRS may extend time for payment for up to 12 years
Anna died January 20, 2017
(D) October 20, 2021
Rita
(C) Victor: $70,000, Dustin: $40,000
all the following statements about the ability to pay estate taxes attributable to closely held businesses over an installment period are true except
(C) the interest payments are deductible on the estate tax return
Section 6166 contains provisions for extending the time for paying estate taxes when the estate consists largely of an interest in a closely held business. an interest in a closely held business does not include
(D) stock in an S corporation carrying on a trade or business if 15% or more in value of the voting stock of such corporation is included in the gross estate of there are 100 or fewer shareholders
Jennifer, age 55 years exactly
(A) none. no GSTT will be assessed
the generation-skipping transfer tax is imposed
(C) as a separate tax in addition to the gift and estate taxes
which of the following is subject to the generation skipping transfer tax?
(C) Carol wrote a will in May 1986 that established a generation-skipping trust. She made no changes to her will before her June 2017 death
which of the following is a true statement of the event(s) that may trigger a generation-skipping transfer tax?
(D) taxable information, a taxable distribution, or a direct skip
Thom (age 63) established a trust and named his second wife, Theresa (age 50), as income beneficiary for 30 years--how many times is the generation-skipping transfer tax levied?
(B) once
Thom (age 63) established a trust and named his second wife, Theresa (age 50), as income beneficiary for 30 years--how many younger generations are there in this trust arrangement?
(B) 3
which of the following is a true statement about the taxable amount of a generation-skipping transfer?
(D) if a generation-skipping transfer tax on a taxable distribution is paid by the generation-skipping trust, an amount equal to the taxes paid by the trust will be treated as a taxable distribution
When Sam died, his property was placed in a trust with his son David
(C) taxable amount: $7,960,000; taxpayer: Carole
several years ago, Jim's will was established a trust for his son, Kevin, and grandsons--what is the inclusion ratio used to calculate GSTT?
(C) 7/8
for 2017, which of the following statements about the generation-skipping transfer exemption is false?
(B) all appreciation that occurs to trust property covered by the allocation of the $5.49 million exemption is also covered by the exemption up to a limit of $10.98 million
several years ago, Jim's will was established a trust for his son, Kevin, and grandsons--what is the generation-skipping transfer tax due on the taxable termination?
(D) $2,496,000