WGU - C237 - TAXATION 1 QUESTIONS
AND WELL DETAILED ANSWERS||
GRADED A+|| LATEST UPDATE 2026
30 -CORRECTANSWER Number of days that are initially given to an audited individual
or business to either request a conference with an appeals officer or agree to the
proposed adjustment. (Ch 2-6)
90 -CORRECTANSWER Number of days that are given to an audited individual or
business after the appeals conference to either pay the proposed deficiency or file a
petition in the US Tax Court to hear the case. (Ch 2-6)
12 Month Rule -CORRECTANSWER A regulation that allows prepaid business
expenses to be currently deducted when the contract does not extend beyond a specific
numbers of months and the contract period does not extend beyond the end of the tax
year following the year of the payment. (Ch 6-15)
1231 Assets -CORRECTANSWER Depreciable or real property used in a taxpayers
trade or business owned for more than one year. (Ch 11-8)
1231 Look Back Rule -CORRECTANSWER A tax rule requiring taxpayers to treat
current year net (Ch 11-18)
,1245 Property -CORRECTANSWER Tangible personal property and intangible property
subject to cost recovery deductions. (Ch 11-10)
1250 Property -CORRECTANSWER Real property subject to cost recovery deductions.
(Ch 11-14)
291 Depreciation Recapture -CORRECTANSWER The portion of a corporate
taxpayer's gain on real property that is converted from 1231 gain to ordinary income.
(Ch 11-14)
481 Adjustment -CORRECTANSWER A change to taxable income associated with a
change in accounting methods. (Ch 9-30)
Abandoned Spouse -CORRECTANSWER A married taxpayer who lives apart from the
spouse for the last 6 months of the year, who files a tax return separate from the
spouse, and who maintains a household for a qualifying child. (Ch 4-24)
Accelerated Death Benefits -CORRECTANSWER Early receipt of life insurance
proceeds that are not taxable un certain circumstances, such as the taxpayer is
medically certified with an illness that is expected to cause death within 24 months. (Ch
5-28)
,Accountable Plan -CORRECTANSWER An Employer's reimbursement plan under
which employees must submit documentation supporting expenses to receive
reimbursement and reimbursements are limited to legitimate business expenses. (Ch 5-
23)
Accounting Methods -CORRECTANSWER The procedure for determining the taxable
year in which a business recognizes a particular item of income or deduction, thereby
dictating the timing of when a taxpayer reports income and deductions. (Ch 9-14)
Accounting Period -CORRECTANSWER A fixed period of time win which a business
reports income and deductions. (Ch 9-13)
Accrual Method -CORRECTANSWER A method of accounting that generally
recognizes income in the period earned and recognizes deductions in the period that
liabilities are incurred. (Ch 5-6)
Accumulated Earnings Tax -CORRECTANSWER A tax assessed on corporations that
retain earning without a business reason to do so. (Ch 15-3)
Acquiescence -CORRECTANSWER Issued after the IRS loses a trial-level or circuit
court case where the IRS doesn't necessarily agree with the court's ruling, but chooses
to no longer litigate the issue. (Ch 2-17)
, Action on Decision -CORRECTANSWER An IRS pronouncement that explains the
background reasoning behind an IRS acquiescence or nonacquiescence . (Ch 2-17)
Ad Valorem -CORRECTANSWER A type of tax based on the value of property. (Ch 1-
15)
Additional Medicare Tax -CORRECTANSWER A tax imposed at a rate of .9% for salary
or wages or net self-employment earning in excess of $200,000. (Ch 8-14)
Adjusted Basis -CORRECTANSWER An asset's carrying value for tax purposes at a
given point in time, measured as the initial basis plus capital improvements less
depreciation or amortization. (Ch 10-1,11-5)
Adjusted Gross Income -CORRECTANSWER Gross income less specific "above the
line" deductions. It is an important reference point in the income tax formula. (Ch 4-2)
After Tax Rate of Return -CORRECTANSWER A taxpayer's before-tax rate of return on
an investment minus the taxes paid on the income from the investment. (Ch 3-3)
Alimony -CORRECTANSWER A support payment of cash made to a former spouse.
(Ch 5-14)
AND WELL DETAILED ANSWERS||
GRADED A+|| LATEST UPDATE 2026
30 -CORRECTANSWER Number of days that are initially given to an audited individual
or business to either request a conference with an appeals officer or agree to the
proposed adjustment. (Ch 2-6)
90 -CORRECTANSWER Number of days that are given to an audited individual or
business after the appeals conference to either pay the proposed deficiency or file a
petition in the US Tax Court to hear the case. (Ch 2-6)
12 Month Rule -CORRECTANSWER A regulation that allows prepaid business
expenses to be currently deducted when the contract does not extend beyond a specific
numbers of months and the contract period does not extend beyond the end of the tax
year following the year of the payment. (Ch 6-15)
1231 Assets -CORRECTANSWER Depreciable or real property used in a taxpayers
trade or business owned for more than one year. (Ch 11-8)
1231 Look Back Rule -CORRECTANSWER A tax rule requiring taxpayers to treat
current year net (Ch 11-18)
,1245 Property -CORRECTANSWER Tangible personal property and intangible property
subject to cost recovery deductions. (Ch 11-10)
1250 Property -CORRECTANSWER Real property subject to cost recovery deductions.
(Ch 11-14)
291 Depreciation Recapture -CORRECTANSWER The portion of a corporate
taxpayer's gain on real property that is converted from 1231 gain to ordinary income.
(Ch 11-14)
481 Adjustment -CORRECTANSWER A change to taxable income associated with a
change in accounting methods. (Ch 9-30)
Abandoned Spouse -CORRECTANSWER A married taxpayer who lives apart from the
spouse for the last 6 months of the year, who files a tax return separate from the
spouse, and who maintains a household for a qualifying child. (Ch 4-24)
Accelerated Death Benefits -CORRECTANSWER Early receipt of life insurance
proceeds that are not taxable un certain circumstances, such as the taxpayer is
medically certified with an illness that is expected to cause death within 24 months. (Ch
5-28)
,Accountable Plan -CORRECTANSWER An Employer's reimbursement plan under
which employees must submit documentation supporting expenses to receive
reimbursement and reimbursements are limited to legitimate business expenses. (Ch 5-
23)
Accounting Methods -CORRECTANSWER The procedure for determining the taxable
year in which a business recognizes a particular item of income or deduction, thereby
dictating the timing of when a taxpayer reports income and deductions. (Ch 9-14)
Accounting Period -CORRECTANSWER A fixed period of time win which a business
reports income and deductions. (Ch 9-13)
Accrual Method -CORRECTANSWER A method of accounting that generally
recognizes income in the period earned and recognizes deductions in the period that
liabilities are incurred. (Ch 5-6)
Accumulated Earnings Tax -CORRECTANSWER A tax assessed on corporations that
retain earning without a business reason to do so. (Ch 15-3)
Acquiescence -CORRECTANSWER Issued after the IRS loses a trial-level or circuit
court case where the IRS doesn't necessarily agree with the court's ruling, but chooses
to no longer litigate the issue. (Ch 2-17)
, Action on Decision -CORRECTANSWER An IRS pronouncement that explains the
background reasoning behind an IRS acquiescence or nonacquiescence . (Ch 2-17)
Ad Valorem -CORRECTANSWER A type of tax based on the value of property. (Ch 1-
15)
Additional Medicare Tax -CORRECTANSWER A tax imposed at a rate of .9% for salary
or wages or net self-employment earning in excess of $200,000. (Ch 8-14)
Adjusted Basis -CORRECTANSWER An asset's carrying value for tax purposes at a
given point in time, measured as the initial basis plus capital improvements less
depreciation or amortization. (Ch 10-1,11-5)
Adjusted Gross Income -CORRECTANSWER Gross income less specific "above the
line" deductions. It is an important reference point in the income tax formula. (Ch 4-2)
After Tax Rate of Return -CORRECTANSWER A taxpayer's before-tax rate of return on
an investment minus the taxes paid on the income from the investment. (Ch 3-3)
Alimony -CORRECTANSWER A support payment of cash made to a former spouse.
(Ch 5-14)
