ExpertHard1 markMultiple Choice
CPA · Question 50 · Area V: Entity Taxation
Which of the following is a requirement for a 'Qualified Subchapter S Subsidiary' (QSub)?
Which of the following is a requirement for a 'Qualified Subchapter S Subsidiary' (QSub)?
Answer options:
A.
It must be 100% owned by an S Corporation.
B.
It must have made a separate S election.
C.
It must have 100 or fewer shareholders.
D.
It must be a foreign corporation.
How to approach this question
Define QSub: A domestic corp 100% owned by an S Corp.
Full Answer
A.It must be 100% owned by an S Corporation.✓ Correct
A QSub is a domestic corporation that is 100% owned by an S corporation and for which the parent S corporation makes a QSub election. The QSub is treated as a disregarded entity for tax purposes.
Common mistakes
Thinking a QSub can have other shareholders.
Practice the full CPA REG Practice Exam 2
72 questions · hints · full answers · grading
More questions from this exam
Q01A CPA is representing a client in an IRS examination regarding a complex tax shelter transaction....HardQ02A tax return preparer is facing a penalty for an understatement of tax liability on a client's re...HardQ03Taxpayer L received a Statutory Notice of Deficiency (90-day letter) from the IRS regarding a tax...HardQ04A CPA is sued for common law negligence by a third party who relied on the CPA's audit report. Th...HardQ05Which of the following communications between a CPA and a client would generally be protected by ...Hard