CPA Exam Lab
Section 5: 23–33%R18

S Corporations

Exam Insight

S corporations blend corporate liability protection with pass-through taxation, and the exam tests the seams: eligibility, the per-share-per-day allocation, and the stock-basis ordering that determines how much loss a shareholder can actually deduct.

CPA Exam Lab is an independent study resource and is not affiliated with, endorsed by, or sponsored by the AICPA® or NASBA. Practice questions are original content created for study purposes. “CPA” is a registered trademark of the AICPA.

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