Which of the Following Statements Is Not True of S

question 69

Multiple Choice

Which of the following statements is not true of S corporations?

• A)S corporations are corporations that receive tax treatment similar to that given to partnerships.
• B)Section 1231 gains and losses pass through separately to stockholders of an S corporation.
• C)The amount of S corporation losses that a shareholder of an S corporation may report on his or her tax return is limited to the basis of the stock plus any loans made by the shareholder to the corporation.
• D)If a taxpayer purchases stock in an S corporation from another shareholder during the year, the new shareholder may report the entire amount of any loss for the year attributable to the shares purchased.
• E)If an otherwise qualifying shareholder acquires 40 percent of the stock of an S corporation, the new shareholder cannot cause the corporation to lose its S corporation election.

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Definitions:

Current Year Financial Statements

Financial reports such as the balance sheet, income statement, and cash flow statement that reflect the company's financial performance and position for the ongoing fiscal year.