Identify Which of the Following Statements Is False

question 94

Multiple Choice

Identify which of the following statements is false.

• A)The AAA balance can be negative, but the shareholder's basis in the S corporation stock cannot be less than zero.
• B)The AAA represents the cumulative income/loss recognized in post-1982 S corporation years.
• C)Nonmoney property distributions made by an S corporation having accumulated E&P are treated differently when determining the corporate-level gain recognized under Sec. 311 than are property distributions made by an S corporation without accumulated E&P.
• D)Tax-exempt income does not increase the AAA but increases the basis of the S corporation stock.

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Definitions:

Volume (Units)

The number of units of product produced, sold, or used.

Horizontal Axis

In graphing, the horizontal axis represents the independent variable and is typically labeled as the x-axis.

Estimated Line of Cost Behavior

A projection or estimation of how costs change in relation to changes in an organization’s level of activity.

High-Low Method

An accounting technique used to estimate variable and fixed costs associated with a business activity by analyzing the highest and lowest levels of activity.