Page 1 of 46
WGU C239 - PA OBJECTIVE ASSESMENT EXAM
| {LATEST 2026/ 2027 UPDATE} COMPLETE
ACTUAL AND AUTHENTIC EXAM | BRAND NEW!
An individual owns 50% of the stock in an S corporation, while the
individual's spouse owns 30% of the stock. The tax year is the calendar
year. The corporation reports $44,000 of ordinary taxable income and
pays no corporate income tax. The individual's standard deduction is
$12,000. The individual has a 12% marginal tax rate for all of the
income. Ignore any possible effect of a QBI deduction.
What is the amount of tax the individual must pay if income taxes are
filed separately rather than jointly?
$672
$1,200
$10,000
$11,200
$1,200
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What amount of Diego's distribution is treated as a nontaxable return
of capital?
$3,000
$17,500
$18,750
$32,000
$32,000
The nontaxable return of capital is limited by how much capital he
has. His distribution was more than capital. Anything over the 32K is
taxable.
How does a shareholder allocate tax basis to newly issued stock in a
non-taxable stock distribution?
The new per share tax basis is the original tax basis divided by the
total number of shares held, including the new shares.
The new per share tax basis is the original tax basis divided by the
total number of shares held, excluding the new shares.
The new shares have no tax basis.
The new shares have 50% of the original tax basis.
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The new per share tax basis is the original tax basis divided by the
total number of shares held, including the new shares.
When does a complete liquidation of a corporation occur?
When it acquires all stock from its shareholders for all of its net assets,
but the corporation does not cease to do business
When it acquires all stock from its shareholders in exchange for 50% of
its net assets
When it acquires more than 50% of stock from its shareholders in
exchange for all of its net assets
When it acquires all stock from its shareholders in exchange for all of
its net assets, after which the corporation ceases to do business
When it acquires all stock from its shareholders in exchange for all of
its net assets, after which the corporation ceases to do business
A corporation is undergoing a complete liquidation and distributes
land to an individual shareholder in exchange for all of the
shareholder's stock.
The land has a basis of $300,000 and a FMV of $400,000 on the
corporation's books and also has a $325,000 liability. The shareholder
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assumes the liability on the property, and their basis in the
corporation's stock is $100,000.
Which gain or loss must the shareholder recognize on the
distribution?
$25,000 gain
$25,000 loss
$75,000 gain
$75,000 loss
$25,000 loss
C Corporation owns 100% of the stock of B Corporation. The adjusted
basis of its stock investment is $100,000. A plan of liquidation is
adopted.
B Corporation distributes to C Corporation assets with a $325,000 FMV
and a $275,000 adjusted basis. B also distributes liabilities in the
amount of $40,000. B Corporation has a $150,000 earnings and profit
(E & P) balance.
What is C Corporation's gain and/or loss on the redemption of B
Corporation's stock?
$50,000 realized gain, but no recognized gain
WGU C239 - PA OBJECTIVE ASSESMENT EXAM
| {LATEST 2026/ 2027 UPDATE} COMPLETE
ACTUAL AND AUTHENTIC EXAM | BRAND NEW!
An individual owns 50% of the stock in an S corporation, while the
individual's spouse owns 30% of the stock. The tax year is the calendar
year. The corporation reports $44,000 of ordinary taxable income and
pays no corporate income tax. The individual's standard deduction is
$12,000. The individual has a 12% marginal tax rate for all of the
income. Ignore any possible effect of a QBI deduction.
What is the amount of tax the individual must pay if income taxes are
filed separately rather than jointly?
$672
$1,200
$10,000
$11,200
$1,200
,Page 2 of 46
What amount of Diego's distribution is treated as a nontaxable return
of capital?
$3,000
$17,500
$18,750
$32,000
$32,000
The nontaxable return of capital is limited by how much capital he
has. His distribution was more than capital. Anything over the 32K is
taxable.
How does a shareholder allocate tax basis to newly issued stock in a
non-taxable stock distribution?
The new per share tax basis is the original tax basis divided by the
total number of shares held, including the new shares.
The new per share tax basis is the original tax basis divided by the
total number of shares held, excluding the new shares.
The new shares have no tax basis.
The new shares have 50% of the original tax basis.
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The new per share tax basis is the original tax basis divided by the
total number of shares held, including the new shares.
When does a complete liquidation of a corporation occur?
When it acquires all stock from its shareholders for all of its net assets,
but the corporation does not cease to do business
When it acquires all stock from its shareholders in exchange for 50% of
its net assets
When it acquires more than 50% of stock from its shareholders in
exchange for all of its net assets
When it acquires all stock from its shareholders in exchange for all of
its net assets, after which the corporation ceases to do business
When it acquires all stock from its shareholders in exchange for all of
its net assets, after which the corporation ceases to do business
A corporation is undergoing a complete liquidation and distributes
land to an individual shareholder in exchange for all of the
shareholder's stock.
The land has a basis of $300,000 and a FMV of $400,000 on the
corporation's books and also has a $325,000 liability. The shareholder
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assumes the liability on the property, and their basis in the
corporation's stock is $100,000.
Which gain or loss must the shareholder recognize on the
distribution?
$25,000 gain
$25,000 loss
$75,000 gain
$75,000 loss
$25,000 loss
C Corporation owns 100% of the stock of B Corporation. The adjusted
basis of its stock investment is $100,000. A plan of liquidation is
adopted.
B Corporation distributes to C Corporation assets with a $325,000 FMV
and a $275,000 adjusted basis. B also distributes liabilities in the
amount of $40,000. B Corporation has a $150,000 earnings and profit
(E & P) balance.
What is C Corporation's gain and/or loss on the redemption of B
Corporation's stock?
$50,000 realized gain, but no recognized gain
