1.The creation of S corporation as an alternative available for business organization created a variety of complications in the tax code and regs. One of these is the need for the accumulated adjustments account. What purpose does the accumulated adjustments account serve? What if the S corporation has always been an S corporation?

2.What is the Form 1120 Schedule M-3? What is shown on the schedule? What type of accounting system would seem to be required to produce this information? What type of knowledge, skills, and abilities would seem to be required to produce this form?

3.Both S Corps and partnerships have rules on permissible tax years, and cannot just use whatever tax year they like. What are the rules for each? Compare and contrast them, since they are not exactly the same. Why does the government worry about this? What is the government worried about?