1. With regard to S corporations and their shareholders, the “at-risk” rules applicable to losses
A. Depend on the type of income reported by the S corporation.
B. Are subject to the elections made by the S corporation’s shareholders.
C. Take into consideration the S corporation’s ratio of debt to equity.
D. Apply at the shareholder level rather than at the corporate level.
2. An S corporation may deduct
A. Charitable contributions within the percentage of income limitation applicable to corporations.
B. Net operating loss carryovers.
C. Foreign income taxes.
D. Compensation of officers
3. On December 31, 2016, Mr. Hyde purchased 50% of S corporation Z’s only class of stock outstanding for $150,000. On November 30, 2017, he purchased the other 50% of Z’s stock for $150,000. For 2017, Z incurred an ordinary loss of $237,250. How much of the loss can Mr. Hyde deduct on his personal income tax return for 2017?
A. $237,250
B. $217,100
C. $128,700
D. $118,625
4. Jasper owns 50% of Blaster, Inc., an S corporation filing returns on a calendar-year basis. For tax year 2017, the corporation has an operating loss of $13,000 and separately stated tax-exempt income of $10,000. Jasper’s basis on January 1, 2017, is $2,000. What is his basis at the end of tax year 2017?
A. $0
B. ($1,000)
C. $500
D. None of the answers are correct.