Review Flashcards
(24 cards)
What is a derivative suit
A SH sued on behalf of a corporation
The rule limiting the deductibility of passive activity losses and credits applies to what type of corporation?
Personal Service corporation
When repossess collateral is sold, who is the first obligation that are paid?
the expenses that the 3rd party has incurred relating to the repossession and selling of the collateral.
what is needed to create an enforceable security interest?
it must exist
the secured party must give value
the debtor must have rights in the collateral
how does one perfect an interest in an enforceable secutity interest?
by filing a financing statement
securities available under a private placement made pursuant to regulation D of the securities act of 1933 cannot…
be the subject of an immediate reoffering to the public
what must be provided to satisfy the Statute of Frauds under the UCC for a contract for the sale of goods?
the writing must provide sufficient evidence of a contract for the sale of goods, the signature of the party to be charged, and the quantity term.
Under Regulation D of the Securities Act of 1933, what is the maximum time period during which an exempt offering may be made?
12 months
How many types of stock may an S corp have?
1 (can be voting and nonvoting however)
How many SHs may a S corp have?
100 or less
how are couples that are both S corp SHs treated by the S corp?
as one.
if an S corp is revoked or terminated, how many years must a corp wait before reelecting S corp status?
5 years
related to passive investment income, how will an S corp terminate?
if it has passive inv income exceeding 25% of gross receipts in each of the prior 3 consecutive years
what type of income does an S corp have?
passive and nonpassive income. However, if an S corporation has excessive net passive income, a tax at the highest corporate rate is imposed on the excessive passive income. Excessive passive income is the amount that passive investment income exceeds 25 percent of the corporation’s gross receipts.
who may be SH of an S corp?
individuals, estates, and certain trusts
how many shares must be issued/outstanding for an S corp to be involuntarily revoked
25,001 shares
are S corps allowed a dividend received deduction?
no
what amount of health insurance premiums is included in SHs gross income?
the entire premium payment must be included in income since SH owns 2% or more of the S corps stock. if SH owned < 2% of the stock, the entire premium pmt could be excluded from income.
can corps be a SH in S corps?
no
what happens to income of an S corp
Income for an S corporation includes taxable and tax-exempt interest. All income of an S corporation is passed through to the shareholder and results in an increase in the shareholder’s basis in the stock of the corporation. The shareholder is responsible for any taxes that may or may not apply to the S corporation’s income.
A corporation that is currently an S corporation needs to account for distributions to shareholders using
an accumulated adjustments account if the corporation has earnings and profits from a period in which it was subject to the corporate tax as a C corporation.
will the SH have a gain if the cash amount distributed by the S corp exceeds the SH’s adj basis in the stock?
yes
If an S corporation has no accumulated earnings and profits, the amount distributed to a shareholder
Decreases the shareholder’s basis for the stock. A distribution from an S corporation that has no accumulated earnings and profits reduces the basis of a shareholder’s stock. If the payment exceeds the shareholder’s basis in the stock, it is viewed as a payment in exchange for stock.
built in gain property
property that has appreciated in value at the time of its contribution to the partnership (the value of gain property is greater than its adjusted basis, whereas the value of loss property is less than its adj basis.
