Chapter 17 - S Corporations

Question 1

What are Separately stated items?

Answer 1

Section 1231

Net Short term capital gains and losses

Net Long term Capital gains and losses

Dividends

Charitable Contributions

Taxes paid to a foreign country or to a US Possession

Tax Exempt interest and related expense

Investment income and related expense

AMont previously deducted

Real estate activities

Section 179 deduction

Credits

Deductions disallowed in computing S corporation’s income ( i.e., deductions whose separate treatment could affect a SH’s tax liability )

Question 2

What items decrease S corporation’s AB?

Answer 2

1) Distributions by the S Corporation that were not included in income ( this is done before determining the allowable loss deduction )

2)All separately stated loss and deduction items

3) Any non separately stated loss of the S Corporation

4) Any expenses of the S Corp that are not deductible in figuring its taxable income or are not properly capitalized

5)The SH’s deduction for depletion of oil and gas property held by the S corporation to the extent it is not more than the SH’s share of the adjusted basis of property.