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WGU C239 Tax – Final Exam Solutions & Explanations
Part I: Conceptual Answers
1. 1. Answer: B
Explanation: §351 does not apply to stock received for services; only property qualifies.
Services invalidate nonrecognition.
2. 2. Answer: B
Explanation: S Corporations are pass-through entities and avoid double taxation, unlike C
corporations.
3. 3. Answer: B
Explanation: Net §1231 gains are treated as long-term capital gains, providing preferential
tax treatment.
4. 4. Answer: C
Explanation: A return of capital reduces the shareholder’s basis in stock; only distributions
from E&P are dividends.
Part II: Calculation Answers
5. 16. Answer: $10,000 gain
Explanation: Liabilities assumed ($70,000) exceed basis ($60,000) → §357(c) triggers gain
of $10,000.
6. 17. Answer: $145,000
Explanation: AGI = $150,000 – $5,000 traditional IRA deduction = $145,000.
7. 18. Answer: $24,000
Explanation: QBI = $120,000 × 20% = $24,000 (no W-2/UBIA limits apply).
8. 19. Answer: $6,000
Explanation: MACRS 5-year property, half-year convention → Year 1 rate = 20%. $30,000 ×
20% = $6,000.
9. 20. Answer: $50,000 taxable as dividend; $200,000 reduces basis
Explanation: $50,000 taxed from E&P; remaining $200,000 is return of capital reducing
stock basis.
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WGU C239 Tax – Final Exam Solutions & Explanations
Part I: Conceptual Answers
1. 1. Answer: B
Explanation: §351 does not apply to stock received for services; only property qualifies.
Services invalidate nonrecognition.
2. 2. Answer: B
Explanation: S Corporations are pass-through entities and avoid double taxation, unlike C
corporations.
3. 3. Answer: B
Explanation: Net §1231 gains are treated as long-term capital gains, providing preferential
tax treatment.
4. 4. Answer: C
Explanation: A return of capital reduces the shareholder’s basis in stock; only distributions
from E&P are dividends.
Part II: Calculation Answers
5. 16. Answer: $10,000 gain
Explanation: Liabilities assumed ($70,000) exceed basis ($60,000) → §357(c) triggers gain
of $10,000.
6. 17. Answer: $145,000
Explanation: AGI = $150,000 – $5,000 traditional IRA deduction = $145,000.
7. 18. Answer: $24,000
Explanation: QBI = $120,000 × 20% = $24,000 (no W-2/UBIA limits apply).
8. 19. Answer: $6,000
Explanation: MACRS 5-year property, half-year convention → Year 1 rate = 20%. $30,000 ×
20% = $6,000.
9. 20. Answer: $50,000 taxable as dividend; $200,000 reduces basis
Explanation: $50,000 taxed from E&P; remaining $200,000 is return of capital reducing
stock basis.
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