When a Sec

question 85

Multiple Choice

When a Sec. 444 fiscal-year election is made, the S corporation makes required payments to the IRS in order to continue to use the fiscal year as its tax year. Which of the following statements about the tax year is correct?

• A)The Sec. 444 payment is deductible by the S corporation as an income tax.
• B)The Sec. 444 payment is allocated ratably to each shareholder and claimed as a tax payment on their own tax return(s).
• C)The Sec. 444 payments are refundable if the S election is terminated.
• D)The Sec. 444 payments must be made quarterly on the same dates that the S corporation's estimated tax payments are otherwise due.

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Definitions:

APS

The Average Propensity to Save, which is the proportion of income that households save rather than consume.

MPC

The marginal propensity to consume, which is the portion of additional income that a consumer spends on goods and services.

Consumption

The total value of goods and services consumed by households and businesses.

APC

Average Propensity to Consume, the fraction of total disposable income that households plan to spend on consumption as opposed to saving.