List five advantages of making an S election. Briefly explaineach item.List five advantages of...List...

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Accounting

List five advantages of making an S election. Briefly explaineach item.
List five advantages of making an S election. (Select all thatapply.)
A. Deductions, losses, and tax credits are separately stated andretain their character when passed through to the shareholders.These amounts may be subject to the various limitations at theshareholder level. This treatment can permit the shareholder toclaim a tax benefit when it otherwise would be denied to thecorporation (e.g., a shareholder can claim the general businesscredit benefit even though the S corporation reports a substantialloss for the year).
B. Capital gains, dividends, and tax-exempt income are includedin S corporation income when passed through to the shareholders.Such amounts become commingled with other corporate earnings andare taxed as ordinary income at the highest tax bracket whendistributed by a C corporation.
C. Undistributed income taxed to the shareholder is not taxedagain when subsequently distributed unless the distribution exceedsthe shareholder's basis for his or her stock.
D. An S corporation's earnings that pass through to theindividual shareholders are subject to the self-employment tax.
E. Splitting the S corporation's income among family members ispossible. However, income splitting is restricted by therequirement that reasonable compensation is provided to familymembers who provide capital and services to the S corporation.
F. An S corporation is only subject to the personal holdingcompany tax and the accumulated earnings tax on a yearly basis ifthe S Corporation has more than 10 shareholders.
G. The corporation's losses pass through to its shareholders andcan be used to reduce the taxes owed on other types of income. Thisfeature can be especially important for new businesses. Thecorporation can make an S election, pass through the start-uplosses to the owners, and terminate the election once a Ccorporation becomes advantageous.
H. The corporation's income is exempt from the corporate incometax. An S corporation's income is taxed only to its shareholders,whose tax bracket may be lower than a C corporation's taxbracket.
choose 5 out of the 7 listed that are advantages of an Scorp.

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SolutionList five advantages of making an S election Selectall that applyA Deductions losses and tax credits are separately stated andretain their character when passed through to the shareholdersThese amounts may be subject to the various limitations at theshareholder level This treatment can permit the shareholder toclaim a tax benefit when it otherwise would be denied to thecorporation eg a shareholder can claim the general businesscredit benefit even though the S corporation reports a See Answer

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In: AccountingList five advantages of making an S election. Briefly explaineach item.List five advantages of...List five advantages of making an S election. Briefly explaineach item.List five advantages of making an S election. (Select all thatapply.)A. Deductions, losses, and tax credits are separately stated andretain their character when passed through to the shareholders.These amounts may be subject to the various limitations at theshareholder level. This treatment can permit the shareholder toclaim a tax benefit when it otherwise would be denied to thecorporation (e.g., a shareholder can claim the general businesscredit benefit even though the S corporation reports a substantialloss for the year).B. Capital gains, dividends, and tax-exempt income are includedin S corporation income when passed through to the shareholders.Such amounts become commingled with other corporate earnings andare taxed as ordinary income at the highest tax bracket whendistributed by a C corporation.C. Undistributed income taxed to the shareholder is not taxedagain when subsequently distributed unless the distribution exceedsthe shareholder's basis for his or her stock.D. An S corporation's earnings that pass through to theindividual shareholders are subject to the self-employment tax.E. Splitting the S corporation's income among family members ispossible. However, income splitting is restricted by therequirement that reasonable compensation is provided to familymembers who provide capital and services to the S corporation.F. An S corporation is only subject to the personal holdingcompany tax and the accumulated earnings tax on a yearly basis ifthe S Corporation has more than 10 shareholders.G. The corporation's losses pass through to its shareholders andcan be used to reduce the taxes owed on other types of income. Thisfeature can be especially important for new businesses. Thecorporation can make an S election, pass through the start-uplosses to the owners, and terminate the election once a Ccorporation becomes advantageous.H. The corporation's income is exempt from the corporate incometax. An S corporation's income is taxed only to its shareholders,whose tax bracket may be lower than a C corporation's taxbracket.choose 5 out of the 7 listed that are advantages of an Scorp.