T-F. S-Corporation: built-in gain, officer salary, year end
T-F
1. S corporations who chose to be taxable C corporations may have to pay a 35 percent tax on certain built-in gains.
2. Revenue agents who audit S corporations are on the alert for shareholder/employee salaries that are unreasonably low.
3. An S corporation can use any taxable year it wishes.
4. A taxable C corporation cannot be a shareholder in an S corporation.
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T-F questions about S Corporations
1. S corporations who chose to be taxable C corporations may have to pay a 35 percent tax on certain built-in gains.
False: It is C corporations who elect S status who have the 10 year built-in gain issue. The issue concerns the contribution of appreciated and untaxed assets from the C corporation. The built-in gain tax will come into play for any assets in the pool ...
Solution Summary
Four T-F questions address some technical issues relating to the election and treatment of S-Corporations including the built-in gain, audit of unreasonably low shareholder salaries, the selection of a year end and the qualifications for shareholders.