WGU C237 TAXATION 1 Exam 292 Questions with
Verified Answers
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) - CORRECT ANSWER 30
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) - CORRECT ANSWER 90
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) - CORRECT ANSWER 12 Month Rule
Depreciable or real property used in a taxpayers trade or business owned for
more than one year. (Ch 11-8) - CORRECT ANSWER 1231 Assets
A tax rule requiring taxpayers to treat current year net (Ch 11-18) - CORRECT
ANSWER 1231 Look Back Rule
Tangible personal property and intangible property subject to cost recovery
deductions. (Ch 11-10) - CORRECT ANSWER 1245 Property
,Real property subject to cost recovery deductions. (Ch 11-14) - CORRECT ANSWER
1250 Property
The portion of a corporate taxpayer's gain on real property that is converted from
1231 gain to ordinary income. (Ch 11-14) - CORRECT ANSWER 291 Depreciation
Recapture
A change to taxable income associated with a change in accounting methods. (Ch
9-30) - CORRECT ANSWER 481 Adjustment
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) - CORRECT ANSWER Abandoned Spouse
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) - CORRECT ANSWER
Accelerated Death Benefits
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) - CORRECT
ANSWER Accountable Plan
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) - CORRECT ANSWER
Accounting Methods
,A fixed period of time win which a business reports income and deductions. (Ch 9-
13) - CORRECT ANSWER Accounting Period
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) -
CORRECT ANSWER Accrual Method
A tax assessed on corporations that retain earning without a business reason to
do so. (Ch 15-3) - CORRECT ANSWER Accumulated Earnings Tax
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) - CORRECT ANSWER Acquiescence
An IRS pronouncement that explains the background reasoning behind an IRS
acquiescence or nonacquiescence . (Ch 2-17) - CORRECT ANSWER Action on
Decision
A type of tax based on the value of property. (Ch 1-15) - CORRECT ANSWER Ad
Valorem
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) - CORRECT ANSWER Additional Medicare Tax
, 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) - CORRECT ANSWER Adjusted Basis
Gross income less specific "above the line" deductions. It is an important
reference point in the income tax formula. (Ch 4-2) - CORRECT ANSWER Adjusted
Gross Income
A taxpayer's before-tax rate of return on an investment minus the taxes paid on
the income from the investment. (Ch 3-3) - CORRECT ANSWER After Tax Rate of
Return
A support payment of cash made to a former spouse. (Ch 5-14) - CORRECT
ANSWER Alimony
Requires that income or expenses are recognized when all events have occurred
that determine or fix the right to receive the income or liability to make the
payments and the amount of the income or expense can be determined with
reasonable accuracy. (Ch 9-21) - CORRECT ANSWER All Events Test
A concept that says: Gross income means all income from whatever source
derived. (Ch 4-2) - CORRECT ANSWER All Inclusive Income
Method used for financial reporting purposes; under this method, bad debt
expense is based on an estimate of the amount of the bad debts in AR at YE. (Ch
9-25) - CORRECT ANSWER Allowance Method
Verified Answers
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) - CORRECT ANSWER 30
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) - CORRECT ANSWER 90
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) - CORRECT ANSWER 12 Month Rule
Depreciable or real property used in a taxpayers trade or business owned for
more than one year. (Ch 11-8) - CORRECT ANSWER 1231 Assets
A tax rule requiring taxpayers to treat current year net (Ch 11-18) - CORRECT
ANSWER 1231 Look Back Rule
Tangible personal property and intangible property subject to cost recovery
deductions. (Ch 11-10) - CORRECT ANSWER 1245 Property
,Real property subject to cost recovery deductions. (Ch 11-14) - CORRECT ANSWER
1250 Property
The portion of a corporate taxpayer's gain on real property that is converted from
1231 gain to ordinary income. (Ch 11-14) - CORRECT ANSWER 291 Depreciation
Recapture
A change to taxable income associated with a change in accounting methods. (Ch
9-30) - CORRECT ANSWER 481 Adjustment
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) - CORRECT ANSWER Abandoned Spouse
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) - CORRECT ANSWER
Accelerated Death Benefits
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) - CORRECT
ANSWER Accountable Plan
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) - CORRECT ANSWER
Accounting Methods
,A fixed period of time win which a business reports income and deductions. (Ch 9-
13) - CORRECT ANSWER Accounting Period
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) -
CORRECT ANSWER Accrual Method
A tax assessed on corporations that retain earning without a business reason to
do so. (Ch 15-3) - CORRECT ANSWER Accumulated Earnings Tax
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) - CORRECT ANSWER Acquiescence
An IRS pronouncement that explains the background reasoning behind an IRS
acquiescence or nonacquiescence . (Ch 2-17) - CORRECT ANSWER Action on
Decision
A type of tax based on the value of property. (Ch 1-15) - CORRECT ANSWER Ad
Valorem
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) - CORRECT ANSWER Additional Medicare Tax
, 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) - CORRECT ANSWER Adjusted Basis
Gross income less specific "above the line" deductions. It is an important
reference point in the income tax formula. (Ch 4-2) - CORRECT ANSWER Adjusted
Gross Income
A taxpayer's before-tax rate of return on an investment minus the taxes paid on
the income from the investment. (Ch 3-3) - CORRECT ANSWER After Tax Rate of
Return
A support payment of cash made to a former spouse. (Ch 5-14) - CORRECT
ANSWER Alimony
Requires that income or expenses are recognized when all events have occurred
that determine or fix the right to receive the income or liability to make the
payments and the amount of the income or expense can be determined with
reasonable accuracy. (Ch 9-21) - CORRECT ANSWER All Events Test
A concept that says: Gross income means all income from whatever source
derived. (Ch 4-2) - CORRECT ANSWER All Inclusive Income
Method used for financial reporting purposes; under this method, bad debt
expense is based on an estimate of the amount of the bad debts in AR at YE. (Ch
9-25) - CORRECT ANSWER Allowance Method
