Krause Corporation Makes an S Election,believing That It Has No

question 36

Multiple Choice

Krause Corporation makes an S election,believing that it has no current or accumulated E&P.However,after an IRS audit,Krause is found to have failed the passive investment income test for three consecutive years and also to have a SubChapter E&P balance from its three pre-election tax years.The IRS will

• A) automatically terminate the election and Krause cannot reelect for a 5-year time period.
• B) retroactively revoke the election to the first day on which it was effective and Krause will not be able to reelect.
• C) treat the error as such and allow the election to continue unbroken.
• D) likely treat the termination as inadvertent and will probably approve a continued S election if the corporation distributes the Subchapter C E&P.

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Definitions:

Mobility Dysfunction

Impairment or difficulty in moving parts of the body, often affecting daily activities and quality of life.

Functional Ability

A person's capacity to perform tasks and activities that are typically necessary in day-to-day life.

Ambulate

The ability or act of walking or moving from one place to another, often used in medical contexts regarding patients' mobility.

Instrumental Activities

Tasks that are necessary for independent living, such as managing finances, household chores, and medication management.