Question

Question 6: Which statement is correct with respect to Section 1014 of the Internal Revenue Code?

A. Section 1014 requires adjustment, after the death of the decedent, to the basis of most items included in a decedent’s gross estate.

B. Section 1014 permits the exclusion from a decedent’s gross estate of real property located in a foreign country.

C. Section 1014 provides mortgage foreclosure relief for real property comprising part of a decedent’s gross estate.

D. Section 1014 was repealed effective January 1, 2015.

Question 7: The decedent died on March 12, 2016. The longest first income tax year the decedent’s executor can choose for the estate will end on

A. December 31, 2016.

B. January 31, 2017.

C. February 28, 2017.

D. March 31, 2017.

Question8: Which of the following trusts is eligible to be an S corporation shareholder?

A. Only electing small business trusts.

B. Only eligible foreign trusts.

C. Only qualified subchapter S trust.

D. Only electing small business trusts and qualified subchapter S trusts.

E. All of the above trusts are eligible to be S corporation shareholders.

Question 9. S corporation borrows $5,000 from Bank at 6% interest for one year.

A. If Bill, one of several shareholders of S corporation, signs an agreement with Bank guaranteeing repayment of the loan, he may add $5,000 to the basis of his S stock.

B. If shareholder Bill signs a repayment guarantee he will be entitled to have his Schedule K-1 from S corporation list 100% of the loan interest paid as his deduction to the exclusion of the other shareholders.

C. Even if shareholder Bill signs a repayment guarantee he will not be permitted to increase his S corporation stock basis by $5,000.

D. Partnership and S corporation tax rules allowing partners/shareholders to increase the basis of partners/shareholders by the amount of partnership/corporation debt are identical.

Question 10. Which of the following statements is correct?

A. A husband and wife count as a single S corporation shareholder.

B. A spouse and that spouse’s estate count as a single S corporation shareholder.

C. Members of a family with a common ancestor (who meet the six generations test), provided the appropriate election is in effect.

D. All of the above are correct.

Question 11 . An S corporation’s shareholder’s adjusted basis in the shareholder’s stock is used to determine

A. the extent to which a distribution made by the corporation to the shareholder is taxable.

B. the amount of losses that shareholders may deduct in a given year.

C. the shareholder’s realized gain or loss upon the sale or exchange of the stock.

D. all of the above.

Question 12. Which of the following tax consequences is not determined by reference to a shareholder’s adjusted basis in the shareholder’s stock in an S corporation?

A. the extent to which a distribution made by the corporation to the shareholder is taxable

B. the amount of losses that the shareholder may deduct in a given year

C. the shareholder’s realized gain or loss upon the sale or exchange of the stock

D. the amount of distributions to which the shareholder is entitled in a given year

Answer 1

Answers to the questions:

Question 6: Which statement is correct with respect to Section 1014 of the Internal Revenue Code?

A. Section 1014 requires adjustment, after the death of the decedent, to the basis of most items included in a decedent’s gross estate.

Question 7: The decedent died on March 12, 2016. The longest first income tax year the decedent’s executor can choose for the estate will end on:

D. March 31, 2017.

Question8: Which of the following trusts is eligible to be an S corporation shareholder?

E. All of the above trusts are eligible to be S corporation shareholders.

Question 9. S corporation borrows $5,000 from Bank at 6% interest for one year.

B. If shareholder Bill signs a repayment guarantee he will be entitled to have his Schedule K-1 from S corporation list 100% of the loan interest paid as his deduction to the exclusion of the other shareholders.

Question 10. Which of the following statements is correct?

D. All of the above are correct.

Question 11 . An S corporation’s shareholder’s adjusted basis in the shareholder’s stock is used to determine:

D. all of the above.

Question 12. Which of the following tax consequences is not determined by reference to a shareholder’s adjusted basis in the shareholder’s stock in an S corporation?

B. the amount of losses that the shareholder may deduct in a given year