[jeff]

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Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[REGTaker]

A

[Anonymous]

A is correct!

[Anonymous]

10–Stahl, an individual, owns 100% of Talon, an S corporation. At the beginning of the year, Stahl's basis in Talon was $65,000. Talon reported the following items from operations during the current year:

Ordinary loss $10,000

Municipal interest income 6,000

Long-term capital gain 4,000

Short-term capital loss 9,000

What was Stahl's basis in Talon at year-end?

A. $50,000

B. $55,000

C. $56,000

D. $61,000

[REGTaker]

D

[Anonymous]

It's C – 65,000 – 10,000 + 6,000 + 4,000 – 9,000 = 56,000. The question is asking who the municipal interest income effects basis as well as the effect of the net capital losses. Shareholder's tax basis is increased/decreased by:

Increases

1.Stock purchases

2. Capital contributions

3. Nonseparately stated income items

4. Separately stated income items

Decreases

1. Nonseparately stated computed loss

2. Separately stated loss and deduction items

3. Distributions not reported as income by shareholder

4. Nondeductible expenses of corporation

Separately stated items.

Tax-exempt income

Capital gains and losses

Section 1231 gains and losses

Charitable contributions

Passive gains, losses, and credits

Portfolio income

Foreign income

Investment income and expense

Depletion

Section 179 expense

[REGTaker]

I only took the capital loss to the extent of the capital gain. 🙁

[Anonymous]

I think that is a C-Corp thing, not an S-Corp.

[Anonymous]

11– B Corporation has been a calendar-year S electing corporation since its inception. S1 and S2 each own half of the stock with a basis of $12 and $9, respectively. This year B reported ordinary income of $81 and $10 of tax-exempt income. B also made a $51 cash distribution to each shareholder at year end. What is S1's basis after the distribution?

A. $ 1.5

B. $ 6.5

C. $52.5

D. $57.5

[REGTaker]

B

[Anonymous]

B is correct!

[Anonymous]

12–Prail Corporation is a C corporation that on February 1, 2014 elected to be taxed as a calendar-year S corporation. On June 15, 2014, Prail sold land with a basis of $100,000 for $200,000 cash. The fair market value of the land on February 1, 2014 was $150,000. Prail had no other income or loss for the year and no carryovers from prior years.

What is Prail's tax?

A. $7,500

B. $17,500

C. $22,250

D. $35,000

[REGTaker]

B

[Anonymous]

B is correct!

[Anonymous]

13–If an S corporation has no accumulated earnings and profits, the amount distributed to a shareholder

A. Must be returned to the S corporation.

B. Increases the shareholder's basis for the stock.

C. Decreases the shareholder's basis for the stock.

D. Has no effect on the shareholder's basis for the stock.

[REGTaker]

C

[Author]

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