Which of the Following S Corporations Would Be Subject to the Excess

question 23

Multiple Choice

Which of the following S corporations would be subject to the excess net passive income tax?

• A) An S corporation that never operated as a C corporation.
• B) An S corporation that has previously distributed all earnings and profits from prior C corporation years.
• C) An S corporation with no earnings and profits from prior C corporation years and with passive investment income that exceeds 30% of its gross receipts.
• D) An S corporation with $2,000 of earnings and profits from prior C corporation years and with passive investment income that equals 22% of its gross receipts.
• E) None of the choices are correct.

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Definitions:

Influencing Responses

The act of affecting or altering someone's reactions or behaviors through various means.

Paraphrasing

The act of rewording someone else's statement to express the same meaning in a different way, often used to demonstrate understanding.

Reflection

The process of thoughtfully considering one's experiences in order to gain insights or understanding.

Information Giving

The act of providing data, facts, or insights to someone who lacks them, often to help make informed decisions or understand a situation better.