Factors That Should Be Considered in Making the S Corporation

question 162

Multiple Choice

Factors that should be considered in making the S corporation election for the current tax year include the following:

• A) Are greater than 50% of the shareholders willing to consent to the election?
• B) Can the requirements for qualification be satisfied by the 15th day of the third month of the tax year and also for the period of the tax year that precedes this date?
• C) Will the corporation have total capital not in excess of $1 million?
• D) Only b. and c.
• E) a., b., and c.

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production process, including utilities, maintenance, and salaries of non-direct labor.

Predetermined Overhead Rate

A rate used to allocate indirect costs to products or services, calculated before the accounting period begins based on estimated costs and activity levels.

Direct Labor-hour

A metric that calculates the total number of hours worked by employees directly involved in manufacturing a product or providing a service.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual units of production, based on a related activity base.