Indicate whether each of the following is either True/Fasle:

1. An S Corporation is a taxpaying entity.

2. If shareholders elect S Corporation status, the corporation generally pays no tax.

3. Stock received by a transferor in exchange for services does not count in determining whether the 80% control test has been met.

4. Under Sec. 351, no gain or loss is recognized by those who exchange property solely for stock of the recipient corporation.

5. When boot is received by a taxpayer transferring assets in a Sec. 351 exchange, gain must be recognized to the extent of the smaller of the realized gain or the FMV of the boot received.

The following are the answers,

False - S organization could be a taste unit which suggests all the financial gain of the S company are going to be relocated to stockholders and also the tax is to be compensated by the stockholders and not the S organization. True - As per constant rationalization on top of you'll be able to settle this. False - Stock acknowledged on either methodology are going to be enclosed for control purpose. True - The profit or loss is merely predictable once the transmission isn't for sole perseverance. True - When boot is acknowledged by a remunerator shifting possessions in a very Sec. 351 discussion, gain should be documented to the level of the lesser of the complete expansion