WGU C237 TAXATION 1 ACTUAL EXAM QUESTIONS AND
WELL VERIFIED ANSWERS| HIGH YIELD QUESTIONS
AND ANSWERS | EXPERT GUARANTEE PASS AND 100%
ACCURATE | FREQUENTLY MOST TESTED QUESTIONS |
LATEST EXAM AND NEWEST VERSION!!!!
Second-highest level of legislative authority of tax?
ANSWER:<< Internal Revenue Code
In which publication does the IRS provide info on tax consequences of specific
transactions?
ANSWER:<< Revenue rulings
An individual is salaried, is not operating a business, is divorced with one child
living at home, earned $93,000 in wages for 2021, and has $17,900 of itemized
deductions. What is this individual's tax liability?
ANSWER:<< $10,620
Which tax is based on the value of an individual's real estate?
ANSWER:<< Property Tax
Flow-through entities in the U.S. tax system?
ANSWER:<< Religious Associations
A taxpayer fails to report income that exceeds 25% of reported gross income but
files the return on time.How many years after a return was originally due might
the statute of limitations expire?
ANSWER:<< 6 Years
Which component of a tax practice focuses on minimizing taxes paid and
maximizing after-tax cash flows while accommodating clients' other desires?
,ANSWER:<< Tax Planning
Which tax term defines a personal expenditure, such as charitable contributions
and medical expenses, which taxpayers may claim if they keep records?
ANSWER:<< Itemized Deductions
A single individual earned wages of $50,000 working at a bank. The individual
received a $6,000 gift from a parent to go to Europe, inherited $10,000 from a
relative, and received $500 interest from a municipal bond. The individual has
no dependents and has itemized deductions of $11,000. What is this individual's
tax liability for 2021?
ANSWER:<< $4295
A married couple, ages 29 and 32, have normal vision and one dependent
daughter who is 14 years old. During 2021, one of the individuals earned taxable
wages of $54,000, and the other earned $100,000. The couple also earned $400
of interest income from their joint savings account, $1,200 interest from a
municipal bond, and incurred $23,590 of eligible itemized deductions. The
couple will be filing a joint return. What is this couple's federal income tax?
ANSWER:<< $19,943
Which scenario represents a realization of income?
ANSWER:<< A payment of $2,000 for stocks sold
Which type of income satisfies all three requirements for the income to be
taxable?
ANSWER:<< Renting out a condo for $5,000
In which situation has a taxpayer actually or constructively received income that
should be included in gross income for the current year?
ANSWER:<< The taxpayer went on vacation the last two weeks of the year, and
he instructed his employer to put the year-end paycheck in his locked desk
drawer at the office. The taxpayer does not return and deposit the paycheck
until the following January.
Which receipt is included in gross income for 2021?
ANSWER:<< Royalties
Which source of income is included in gross income?
ANSWER:<< Rental
,What is it called when a person attempts to not pay federal income taxes by
willfully excluding taxable income?
ANSWER:<< Tax Evasion
Difference between tax evasion and tax avoidance?
ANSWER:<<
tax avoidance—An action taken to lessen tax liability and maximize after-tax
income.
tax evasion—The failure to pay or a deliberate underpayment of taxes.
Which item is excluded from gross income by the Internal Revenue Code?
ANSWER:<<
A $200 gift from a relative
What must be included in gross income?
ANSWER:<<
Receipt of a cash dividend
Which two expenses are a tax-free use of a qualified tuition plan (QTP)
distribution?
ANSWER:<<
Rent and Textbooks
Which event would result in taxable income?
ANSWER:<<
Forgiveness of mortgage debt on rental property
Which type of gain does a taxpayer have if the taxpayer owns stock that has
appreciated in value?
ANSWER:<<
An unrealized gain
What is a Recognized Gain?
ANSWER:<<
, when an investment or asset is sold for an amount that is greater than what was
originally paid.
What is an Unrealized Gain?
ANSWER:<<
A potential profit that exists on paper resulting from an investment that has yet
to be sold for cash.
What is true about realized and recognized gains and losses?
ANSWER:<<
Realized losses may be more than recognized losses.
An individual purchases a piece of property with a fair market value of $30,000
for $28,000. The individual takes out a loan for $14,000 and pays the other
$14,000 in cash. In addition, the individual pays $500 in transactions costs to
purchase the property and $200 of delivery costs. What is the basis for the
property?
ANSWER:<<
$28,700
An individual purchases a piece of property with a fair market value of $50,000
for $54,000. The individual uses a loan for $44,000 and pays the other $10,000 in
cash. In addition, the individual pays $1,000 in transactions costs to purchase
the property and expects to earn $5,000 per year from renting the property to
others. What is the basis for this property?
ANSWER:<<
$55,000
What is an example of an ordinary asset?
ANSWER:<<
Inventory
What is an ordinary asset?
ANSWER:<<
An ordinary asset is an item that holds future economic value to a company or
individual, and that future economic benefit is expected to be used within the
next year.
WELL VERIFIED ANSWERS| HIGH YIELD QUESTIONS
AND ANSWERS | EXPERT GUARANTEE PASS AND 100%
ACCURATE | FREQUENTLY MOST TESTED QUESTIONS |
LATEST EXAM AND NEWEST VERSION!!!!
Second-highest level of legislative authority of tax?
ANSWER:<< Internal Revenue Code
In which publication does the IRS provide info on tax consequences of specific
transactions?
ANSWER:<< Revenue rulings
An individual is salaried, is not operating a business, is divorced with one child
living at home, earned $93,000 in wages for 2021, and has $17,900 of itemized
deductions. What is this individual's tax liability?
ANSWER:<< $10,620
Which tax is based on the value of an individual's real estate?
ANSWER:<< Property Tax
Flow-through entities in the U.S. tax system?
ANSWER:<< Religious Associations
A taxpayer fails to report income that exceeds 25% of reported gross income but
files the return on time.How many years after a return was originally due might
the statute of limitations expire?
ANSWER:<< 6 Years
Which component of a tax practice focuses on minimizing taxes paid and
maximizing after-tax cash flows while accommodating clients' other desires?
,ANSWER:<< Tax Planning
Which tax term defines a personal expenditure, such as charitable contributions
and medical expenses, which taxpayers may claim if they keep records?
ANSWER:<< Itemized Deductions
A single individual earned wages of $50,000 working at a bank. The individual
received a $6,000 gift from a parent to go to Europe, inherited $10,000 from a
relative, and received $500 interest from a municipal bond. The individual has
no dependents and has itemized deductions of $11,000. What is this individual's
tax liability for 2021?
ANSWER:<< $4295
A married couple, ages 29 and 32, have normal vision and one dependent
daughter who is 14 years old. During 2021, one of the individuals earned taxable
wages of $54,000, and the other earned $100,000. The couple also earned $400
of interest income from their joint savings account, $1,200 interest from a
municipal bond, and incurred $23,590 of eligible itemized deductions. The
couple will be filing a joint return. What is this couple's federal income tax?
ANSWER:<< $19,943
Which scenario represents a realization of income?
ANSWER:<< A payment of $2,000 for stocks sold
Which type of income satisfies all three requirements for the income to be
taxable?
ANSWER:<< Renting out a condo for $5,000
In which situation has a taxpayer actually or constructively received income that
should be included in gross income for the current year?
ANSWER:<< The taxpayer went on vacation the last two weeks of the year, and
he instructed his employer to put the year-end paycheck in his locked desk
drawer at the office. The taxpayer does not return and deposit the paycheck
until the following January.
Which receipt is included in gross income for 2021?
ANSWER:<< Royalties
Which source of income is included in gross income?
ANSWER:<< Rental
,What is it called when a person attempts to not pay federal income taxes by
willfully excluding taxable income?
ANSWER:<< Tax Evasion
Difference between tax evasion and tax avoidance?
ANSWER:<<
tax avoidance—An action taken to lessen tax liability and maximize after-tax
income.
tax evasion—The failure to pay or a deliberate underpayment of taxes.
Which item is excluded from gross income by the Internal Revenue Code?
ANSWER:<<
A $200 gift from a relative
What must be included in gross income?
ANSWER:<<
Receipt of a cash dividend
Which two expenses are a tax-free use of a qualified tuition plan (QTP)
distribution?
ANSWER:<<
Rent and Textbooks
Which event would result in taxable income?
ANSWER:<<
Forgiveness of mortgage debt on rental property
Which type of gain does a taxpayer have if the taxpayer owns stock that has
appreciated in value?
ANSWER:<<
An unrealized gain
What is a Recognized Gain?
ANSWER:<<
, when an investment or asset is sold for an amount that is greater than what was
originally paid.
What is an Unrealized Gain?
ANSWER:<<
A potential profit that exists on paper resulting from an investment that has yet
to be sold for cash.
What is true about realized and recognized gains and losses?
ANSWER:<<
Realized losses may be more than recognized losses.
An individual purchases a piece of property with a fair market value of $30,000
for $28,000. The individual takes out a loan for $14,000 and pays the other
$14,000 in cash. In addition, the individual pays $500 in transactions costs to
purchase the property and $200 of delivery costs. What is the basis for the
property?
ANSWER:<<
$28,700
An individual purchases a piece of property with a fair market value of $50,000
for $54,000. The individual uses a loan for $44,000 and pays the other $10,000 in
cash. In addition, the individual pays $1,000 in transactions costs to purchase
the property and expects to earn $5,000 per year from renting the property to
others. What is the basis for this property?
ANSWER:<<
$55,000
What is an example of an ordinary asset?
ANSWER:<<
Inventory
What is an ordinary asset?
ANSWER:<<
An ordinary asset is an item that holds future economic value to a company or
individual, and that future economic benefit is expected to be used within the
next year.
