Section 5: 23–33%R18
S Corporations
Exam insight
S corporations combine corporate liability protection with pass-through taxation, and the exam tests the tricky seams: eligibility, the per-share-per-day allocation, and the stock-basis ordering that decides how much loss a shareholder can actually deduct.
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What AICPA wants you to know
- 1Apply S corporation eligibility requirements and identify disqualifying shareholders
- 2Determine the election timing and effect of Form 2553
- 3Allocate income and separately stated items per share, per day
- 4Compute shareholder stock basis using the correct ordering rules
- 5Apply the loss limitation hierarchy: stock and debt basis, at-risk, then passive
- 6Identify the built-in gains tax and the passive investment income sting tax