When an S Corporation Terminates S Status, Special Rules Allow

question 34

Multiple Choice

When an S corporation terminates S status, special rules allow it to avoid some of the harsh tax consequences of suddenly becoming a C corporation.Which of the following is not allowed by the post-termination rules?

• A)Nontaxable cash distributions may be made from AAA.
• B)Nontaxable property distributions may be made from AAA.
• C)A shareholder may increase his or her basis in stock.
• D)All of the above are allowed.

---

Definitions:

Bagels

A type of bread product originating from the Jewish communities in Poland, known for its dense, chewy texture and a hole in the middle.

Supply

The total amount of a specific good or service that is available to consumers at a particular price level.

Demand

The amount of a product or service that buyers are prepared and capable of buying at different price levels over a specified time frame.

Consumption

The use of goods and services by households or individuals, which is a primary component of economic activity.