WGU Taxation 1- EXAM STUDY GUIDE
2026/2027 COMPLETE QUESTIONS WITH
VERIFIED CORRECT ANSWERS || 100%
GUARANTEED PASS | NEWEST VERSION
This document contains a comprehensive and well-structured set of exam questions and
answers designed to support students preparing for Western Governors University (WGU)
assessments. The material is carefully organized to reflect current course competencies and
includes detailed explanations to enhance understanding of key concepts.
The content is aligned with WGU’s competency-based learning model and focuses on helping
students:
• Master core subject concepts
• Understand real-world application scenarios
• Prepare effectively for objective and performance assessments
• Strengthen critical thinking and analytical skills
Each question includes clear, accurate answers with thorough explanations to reinforce
learning and improve exam readiness. The material is updated to reflect the latest course
standards and exam expectations.
This resource is ideal for students seeking structured revision material, practice questions,
and simplified explanations to boost confidence before sitting for their WGU exams.
3 Taxpayer filing requirements:
1. Individuals must file if their gross income is above their standard deduction.
2. All C corporations must file if their gross income is above their standard deduction.
3. ?
All estates and trusts must file if gross income exceeds $600.
3 Taxpayer filing requirements:
1. Individuals must file if their gross income is above their standard deduction.
,2. ?
3. All estates and trusts must file if gross income exceeds $600.
All C corporations must file if their gross income is above their standard deduction.
3 Taxpayer filing requirements:
1. ?
2. All C corporations must file if their gross income is above their standard deduction.
3. All estates and trusts must file if gross income exceeds $600.
Individuals must file if their gross income is above their standard deduction.
Individual tax return due date
15th day of 4th month following end of tax year
If you are ________ then you must pay a quarterly tax bill.
self employed
OASDI Tax rate (Employee, employer)
6.2%
Medicare Tax rate (Employee, employer)
1.45%
OASDI Tax rate (Self employed)
12.4%
Medicare Tax rate (Self employed)
2.9%
Total self employment tax rate
15.3%
Statute of Limitation
The period of time a taxpayer can file an amended tax return. (about 3 years.)
When is a 6 year statute of limitation enforced?
If the taxpayer omits items of gross income that exceed 25% of the gross income reported.
Statutory Notice of Deficiency
,90 days to pay or petition the US tax court for a hearing
(after you pay, you can sue for a refund or just be done)
Where does tax law come from? (legislative)
Congress. Internal revenue code.
Where does tax law come from? (Executive/Administrative)
Administrative source- Treasury regulations. IRS.
Where does tax law come from?(Judicial)
Ultimate authority to interpret IRC.
Lesser Administrative authorities
Regulations, Revenue Rulings, Revenue Procedures
Primary Tax Law Source
Court decisions, Treasury Regulations, and IRS Pronouncements.
When seeking to argue your point, always use a ___ source.
Primary
Private Letter rulings
IRS pronouncements issued in response to a taxpayer request for a ruling on specific issues for
that particular taxpayer.
Technical Advice Memorandums
Requested by IRS agent during audit to determine how to treat taxpayer issue.
Circular 230
Rules to practice before the IRS.
Penalty for failing to file tax return
5%
Penalty for failure to pay taxes owed
0.5%
Penalty for fraud
75% of liability attributed to the fraud
, Penalty for small failures of a tac practitioner
$50 per violation
Penalty for willful understatement of tax
Greater of $5000 or 75% of income derived
Non flow through entity
When the corporation is a separate legal entity from its owners. C corporations. Double
taxation.
Flow through entity
Money made by the entity flows through to the taxpayer. Partnerships, S corporations.
What are the 5 criteria for evaluating alternative tax systems?
Sufficiency
Equity
Certainty
Convenience
Economy
What is sufficiency in regards to a tax system evaluation?
Checks if taxes are enough to pay government expenses.
What is equity in regards to a tax system evaluation?
The fairness of the tax system. Can be horizontal, taxpayers with similar situations, or vertical,
taxpayers with different abilities.
What is certainty in regards to a tax system evaluation?
Where, when, and how to determine the tax.
What is convenience in regards to a tax system evaluation?
Ensuring the system is designed to facilitate collection without undue hardship on the taxpayer
or the government.
What is Economy/Simplicity in regards to a tax system evaluation?
Ensuring that administrative and compliance costs are minimized.
What 3 parties are included in every transaction?
2026/2027 COMPLETE QUESTIONS WITH
VERIFIED CORRECT ANSWERS || 100%
GUARANTEED PASS | NEWEST VERSION
This document contains a comprehensive and well-structured set of exam questions and
answers designed to support students preparing for Western Governors University (WGU)
assessments. The material is carefully organized to reflect current course competencies and
includes detailed explanations to enhance understanding of key concepts.
The content is aligned with WGU’s competency-based learning model and focuses on helping
students:
• Master core subject concepts
• Understand real-world application scenarios
• Prepare effectively for objective and performance assessments
• Strengthen critical thinking and analytical skills
Each question includes clear, accurate answers with thorough explanations to reinforce
learning and improve exam readiness. The material is updated to reflect the latest course
standards and exam expectations.
This resource is ideal for students seeking structured revision material, practice questions,
and simplified explanations to boost confidence before sitting for their WGU exams.
3 Taxpayer filing requirements:
1. Individuals must file if their gross income is above their standard deduction.
2. All C corporations must file if their gross income is above their standard deduction.
3. ?
All estates and trusts must file if gross income exceeds $600.
3 Taxpayer filing requirements:
1. Individuals must file if their gross income is above their standard deduction.
,2. ?
3. All estates and trusts must file if gross income exceeds $600.
All C corporations must file if their gross income is above their standard deduction.
3 Taxpayer filing requirements:
1. ?
2. All C corporations must file if their gross income is above their standard deduction.
3. All estates and trusts must file if gross income exceeds $600.
Individuals must file if their gross income is above their standard deduction.
Individual tax return due date
15th day of 4th month following end of tax year
If you are ________ then you must pay a quarterly tax bill.
self employed
OASDI Tax rate (Employee, employer)
6.2%
Medicare Tax rate (Employee, employer)
1.45%
OASDI Tax rate (Self employed)
12.4%
Medicare Tax rate (Self employed)
2.9%
Total self employment tax rate
15.3%
Statute of Limitation
The period of time a taxpayer can file an amended tax return. (about 3 years.)
When is a 6 year statute of limitation enforced?
If the taxpayer omits items of gross income that exceed 25% of the gross income reported.
Statutory Notice of Deficiency
,90 days to pay or petition the US tax court for a hearing
(after you pay, you can sue for a refund or just be done)
Where does tax law come from? (legislative)
Congress. Internal revenue code.
Where does tax law come from? (Executive/Administrative)
Administrative source- Treasury regulations. IRS.
Where does tax law come from?(Judicial)
Ultimate authority to interpret IRC.
Lesser Administrative authorities
Regulations, Revenue Rulings, Revenue Procedures
Primary Tax Law Source
Court decisions, Treasury Regulations, and IRS Pronouncements.
When seeking to argue your point, always use a ___ source.
Primary
Private Letter rulings
IRS pronouncements issued in response to a taxpayer request for a ruling on specific issues for
that particular taxpayer.
Technical Advice Memorandums
Requested by IRS agent during audit to determine how to treat taxpayer issue.
Circular 230
Rules to practice before the IRS.
Penalty for failing to file tax return
5%
Penalty for failure to pay taxes owed
0.5%
Penalty for fraud
75% of liability attributed to the fraud
, Penalty for small failures of a tac practitioner
$50 per violation
Penalty for willful understatement of tax
Greater of $5000 or 75% of income derived
Non flow through entity
When the corporation is a separate legal entity from its owners. C corporations. Double
taxation.
Flow through entity
Money made by the entity flows through to the taxpayer. Partnerships, S corporations.
What are the 5 criteria for evaluating alternative tax systems?
Sufficiency
Equity
Certainty
Convenience
Economy
What is sufficiency in regards to a tax system evaluation?
Checks if taxes are enough to pay government expenses.
What is equity in regards to a tax system evaluation?
The fairness of the tax system. Can be horizontal, taxpayers with similar situations, or vertical,
taxpayers with different abilities.
What is certainty in regards to a tax system evaluation?
Where, when, and how to determine the tax.
What is convenience in regards to a tax system evaluation?
Ensuring the system is designed to facilitate collection without undue hardship on the taxpayer
or the government.
What is Economy/Simplicity in regards to a tax system evaluation?
Ensuring that administrative and compliance costs are minimized.
What 3 parties are included in every transaction?
