Deck 14 Flashcards Preview

Regulation > Deck 14 > Flashcards

Flashcards in Deck 14 Deck (19):
1

Fringe benefits paid by an S corporation are deductible by the S corporation only for:

Non-shareholder employees and employee-shareholder's owning 2% or less of the S corporation

2

S corporation status can be revoked if shareholders owning more than ______ of the total number of issued and outstanding shares consent

50%

3

Net business income for S corporation =

Gross receipts + income items (not including dividend income) - expenses

4

Unrealized "built-in" gain for an S corp. results when the following two conditions are met:

1) a C corporation elects S corporation status, and (2) the FMV of assets > adjusted basis

5

Losses for an S corporation are only deductible only to the extent of:

The shareholder's basis

6

What is the tax rate for an S corporation that pays tax on built-in gains?

The highest corporate income tax rate which is 35%

7

Are stock dividends taxable?

Generally not taxable; unless shareholder has a choice of receiving cash or the property (FMV)

8

Proportional stock redemption is:

dividend income

9

Disproportional stock redemption is:

Capital gain/loss

10

Corporation sells assets and distributes cash to shareholders; equation for corp:

Sales price - basis = taxable gain/loss

11

Corporation distributes assets to shareholders; equation for corp:

FMV - basis = taxable gain/loss

12

Corp sells assets and distributes cash to shareholders; equation for shareholder:

Proceeds - stock basis = taxable gain/loss

13

Corp distributes assets to shareholder; equation for shareholder:

Sales price - stock basis = taxable gain/loss

14

Type A reorganization (Tax free for all reorganizations):

Mergers or consolidations

15

Type B reorganization:

acquisition by one corp. of another corp's stock, stock for stock

16

Deductible fringe benefits for S corp.

Deductible for non-shareholder employees and those owning 2% or less of the S corp.

17

To qualify as an exempt organization, an applicant must not be:

A private foundation organized and operated exclusively to influence legislation.

18

Unrelated business income is:

1) Derived from an activity that constitutes a trade or business, 2) Is regularly carried on, and 3) Is not substantially related to the organization's tax-exempt purpose.

19

What exempt organization must file annual information returns?

Private foundations