Davies Corporation Is a Calendar-Year Taxpayer That Is Owned Equally

question 15

Multiple Choice

Davies Corporation is a calendar-year taxpayer that is owned equally by Vivian, Rob, Danny, and Doug Davies. At the close of business on May 31, Rob Davies sells his 25% stock interest to Paula Bryan. Which of the following statements about the S election is correct?

• A)Paula must consent to the S election, otherwise the election terminates at the close of business on May 31.
• B)A new S election form must be filed by June 30 of the same year, with all shareholders consenting to the election. If a new S election is not filed, the election terminates on June 30 of that year.
• C)Paula has 30 days to terminate the S election, otherwise the election remains in place for the entire year and all subsequent years.
• D)None of the above statements are correct.

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Definitions:

Creatine Phosphate

A protein that stores extra phosphate groups.

Phosphate Groups

Functional groups consisting of a phosphorus atom bonded to four oxygen atoms, important in energy transfer and molecular signaling.

Acetylcholine

A neurotransmitter involved in the activation of muscle action, memory, and transmission of nerve impulses.

Intercalated Discs

Specialized connections between neighboring cardiac muscle cells that facilitate the rapid transmission of electrical impulses through the heart.