2s. A calendar year corporatlon wlshes to elecr to be taxed wa an S corporatlion

Question

2s. A calendar year corporatlon wlshes to elecr to be taxed wa an S corporatlion. Whatls the last daythat the corporation can file an electlon to be effective for 2012 a. December 31,2011. b. March 15, 2012 c. April 15, 2012 d. December 31, 2012 27. A corporation that elected S status In 20X2 has C corporation earnings and proits of $50,000 from its C corporation years. Durlng 20X5 the corporatlon's gross recelpts are $120,000, which Includes $75,000 of Interest Income. Expenses related to the Interest Income are $10,000. The corporaclon's excess passive Investment Income would be a. $45,000. c. $39,000. d. $20,000. 28. An S corporation incurs an operating loss of $80,000 In 20X5 and makes no distributions to lta shareholders during the year. Before consldering the current year operating lots, Abe, a shareholder that owns 50 percent of the S corporatlon stock, has a basls In his shares of S corporátlon stock of $30,000 and $20,000 basls In a note from the corporation. How much of che $80,000 loss can he deduct on hls 20xX5 Indlvldunl inx return? a. $0. b. $20,000. c. $30,000 d. $40,000

Explanation / Answer

Corporations have one month beyond the time to file a Federal Election. As per Internal revenue Code Section 1362 election must be made by the 15th day of the third month of the taxable year (Taxable year is from January to December). Taxpayers therefore have until the 15th day of the fourth month of the tax year.

Accordingly the Corporation can file an election to be effective for 2012 will be April 15, 2012.

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