Answer the following statements true (T) or false (F)
1. Tax-exempt interest earned by an S corporation is not reported to its shareholders because it is excluded from the shareholders' gross income.
2. S shareholders are allocated shares of income, gain, loss, deduction, and credit based on their number of shares of stock and period of time for which the stock is held.
3. S shareholders cannot increase the basis of their stock by a ratable share of the general S corporation liabilities.
4. The accumulated adjustments account is the cumulative total of ordinary income or loss and separately stated items (excluding tax-exempt income and expenses) for the most recent continuous period during which the corporation has been an S corporation.
1. FALSE
2. TRUE
3. TRUE
4. TRUE
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From 1972 to 1974, the expected real interest rate on short-term bonds averaged about +2 percent, but the realized real interest rate averaged about ?2 percent. The main reason for the difference was that
A. actual inflation was about 4 percentage points lower than expected inflation. B. actual inflation was about 4 percentage points higher than expected inflation. C. a monopoly cornered the market on short-term bonds. D. nominal rate of interest was zero.
Pager, a simple personal device for short messages, became famous in the 1990s. Troveron Communications launched a pager in the early twenty-first century
Due to the introduction of mobile phones and text messaging, the pager industry was on a decline. The company's innovations were not well received by the market and the product was a failure. Which of the following is the most likely reason for the product's failure in this case? A) poor launch timing of the product B) a small and fragmented target market C) high cost of development D) social and economic constraints E) hasty product development
A(n) ________ is the most common type of incentive plan. It compares a worker's performance against an objective standard with pay determined by his or her own performance.
A. stock plan B. gainsharing plan C. profit-sharing plan D. merit pay system E. individual plan
Wanda is faced with an ethical dilemma. She knows her supervisor, the CFO, wants to accelerate the recoding of revenue to an earlier period to "make the numbers," but Wanda is convinced this would violate GAAP. If Wanda reasons at stage 4 of Kohlberg's model she is most likely to:
A. Make a decision based on what is in her own best interests B. Consider the interests of the stakeholders but decide based on what is in her best interests C. Refuse to record the transaction as desired by the CFO D. Inform the board of directors of the difference of opinion with the CFO