Which of the Following Statements Is Not True of S

question 56

Multiple Choice

Which of the following statements is not true of S corporations?

• A)S corporations are corporations that receive tax treatment similar to that given partnerships.
• B)Section 1231 gains and losses pass through separately to stockholders of an S corporation.
• C)The amount of S cocporation losses that a shareholder of an S corporation may report on his or her tax return is limited to the basis of the stock plus any loans made by the shareholder to the corporation.
• D)If a taxpayer purchases stock in an S corporation from another shareholder during the year, the new shareholder may report the entire amount of any loss for the year attributable to the shares purchased.
• E)If a shareholder acquires 40 percent of the stock of an S corporation, the new shareholder cannot cause the corporation to lose its S corporation election.

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Definitions:

International Trade Arbitration Forum

A platform or organization dedicated to resolving disputes related to international trade through arbitration rather than courts.

Foreign Corrupt Practices Act

A U.S. law that prohibits companies and their managers from making corrupt payments to foreign officials for the purpose of obtaining or keeping business.

Civil Law System

A legal system that is based on a comprehensive set of laws that are codified into a referable system, prevalent in countries like France and Germany.

Common Law System

A legal system characterized by case law, which is law developed by judges through decisions of courts and similar tribunals.