WGU C239 EXAM PROBLEMS 2026
CERTIFICATION EVALUATION SCRIPT 110
TESTED QUESTIONS WITH CORRECT
ANSWERS VERIFIED FULL SOLUTION
GUIDE 26 PAGES
⩥ accelerated cost recovery system (ACRS). Answer: A method in
which the cost of tangible property is recovered (depreciated) over a
prescribed period of time. This depreciation approach disregards salvage
value, imposes a period of cost recovery that depends upon the
classification of the asset into one of various recovery periods, and
prescribes the applicable percentage of cost that can be deducted each
year. A modified system is currently the default cost recovery method; it
is referred to as MACRS. § 168.
⩥ accountable plan. Answer: A type of expense reimbursement plan that
requires an employee to render an adequate accounting to the employer
and return any excess reimbursement or allowance. If the expense
qualifies, it will be treated as a deduction for AGI.
⩥ accumulated adjustments account (AAA). Answer: An account that
aggregates an S corporation's post-1982 income, loss, and deductions for
the tax year (including nontaxable income and nondeductible losses and
expenses). After the year-end income and expense adjustments are made,
the account is reduced by distributions made during the tax year.
,⩥ Accumulated E & P. Answer: Net undistributed tax-basis earnings of a
corporation aggregated from March 1, 1913, to the end of the prior tax
year. Used to determine the amount of dividend income associated with
a distribution to shareholders. § 316 and Reg. § 1.316-2.
⩥ acquiescence. Answer: Agreement by the IRS on the results reached in
certain judicial decisions; sometimes abbreviated Acq. or A.
⩥ ad valorem taxes. Answer: A tax imposed on the value of property.
The most common ad valorem tax is that imposed by states, counties,
and cities on real estate. Ad valorem taxes can be imposed on personal
property as well.
⩥ additional first-year depreciation. Answer: In general, this provision
provides for an additional cost recovery deduction of 100 percent for
qualified property acquired and placed in service after September 27,
2017, and before January 1, 2027. (The bonus depreciation percentage is
reduced by 20 percent for each tax year after 2022.) Qualified property
includes most types of new and used property other than buildings. The
taxpayer can elect to forgo this bonus depreciation. Different rules
applied between 2008 and September 28, 2017. § 168(k).
⩥ adjusted basis. Answer: The cost or other basis of property reduced by
depreciation allowed or allowable and increased by capital
improvements. Other special adjustments are provided in § 1016 and the
related Regulations.
,⩥ allocate. Answer: The assignment of income for various tax purposes.
A multistate corporation's nonbusiness income usually is allocated to the
state where the nonbusiness assets are located; it is not apportioned with
the rest of the entity's income. The income and expense items of an
estate or a trust are allocated between income and corpus components.
Specific items of income, expense, gain, loss, and credit can be allocated
to specific partners if a substantial economic nontax purpose for the
allocation is established.
⩥ alternative depreciation system (ADS). Answer: A cost recovery
system in which the cost or other initial basis of an asset is recovered
using the straight-line method over recovery periods similar to those
used in MACRS. The alternative system must be used in certain
instances and can be elected in other instances. § 168(g).
⩥ amortization. Answer: The tax deduction for the cost or other basis of
an intangible asset over the asset's estimated useful life. Examples of
amortizable intangibles include patents, copyrights, and leasehold
interests. Most purchased intangible assets (e.g., goodwill) can be
amortized for income tax purposes over a 15-year period. § 197.
⩥ amount realized. Answer: The amount received by a taxpayer upon
the sale or exchange of property. Amount realized is the sum of the cash
and the fair market value of any property or services received by the
taxpayer plus any related debt assumed by the buyer. Determining the
, amount realized is the starting point for arriving at realized gain or loss.
§ 1001(b).
⩥ apportioned. Answer: The assignment of the business income of a
multistate corporation to specific states for income taxation. Usually, the
apportionment procedure accounts for the property, payroll, and sales
activity levels of the various states, and a proportionate assignment of
the entity's total income is made using a statutory apportionment
formula. Most states exclude nonbusiness income from the
apportionment procedure; they allocate nonbusiness income to the states
where the nonbusiness assets are located.
⩥ automatic mileage method. Answer: Automobile expenses are
generally deductible only to the extent the automobile is used in business
or for the production of income. Personal commuting expenses are not
deductible. The taxpayer may deduct actual expenses (including
depreciation and insurance), or the standard (automatic) mileage rate
may be used (56 cents per mile for 2021 and 57.5 cents per mile for
2020). Automobile expenses incurred for medical purposes are
deductible to the extent of actual out-of-pocket expenses or at the rate of
16 cents per mile for 2021 and 17 cents per mile for 2020. For charitable
activities, the rate is 14 cents per mile.
⩥ average tax rate. Answer: The average tax rate is equal to the tax
liability divided by taxable income. This rate can be useful in comparing
taxpayers or a taxpayer's changed tax picture from one year to another.
CERTIFICATION EVALUATION SCRIPT 110
TESTED QUESTIONS WITH CORRECT
ANSWERS VERIFIED FULL SOLUTION
GUIDE 26 PAGES
⩥ accelerated cost recovery system (ACRS). Answer: A method in
which the cost of tangible property is recovered (depreciated) over a
prescribed period of time. This depreciation approach disregards salvage
value, imposes a period of cost recovery that depends upon the
classification of the asset into one of various recovery periods, and
prescribes the applicable percentage of cost that can be deducted each
year. A modified system is currently the default cost recovery method; it
is referred to as MACRS. § 168.
⩥ accountable plan. Answer: A type of expense reimbursement plan that
requires an employee to render an adequate accounting to the employer
and return any excess reimbursement or allowance. If the expense
qualifies, it will be treated as a deduction for AGI.
⩥ accumulated adjustments account (AAA). Answer: An account that
aggregates an S corporation's post-1982 income, loss, and deductions for
the tax year (including nontaxable income and nondeductible losses and
expenses). After the year-end income and expense adjustments are made,
the account is reduced by distributions made during the tax year.
,⩥ Accumulated E & P. Answer: Net undistributed tax-basis earnings of a
corporation aggregated from March 1, 1913, to the end of the prior tax
year. Used to determine the amount of dividend income associated with
a distribution to shareholders. § 316 and Reg. § 1.316-2.
⩥ acquiescence. Answer: Agreement by the IRS on the results reached in
certain judicial decisions; sometimes abbreviated Acq. or A.
⩥ ad valorem taxes. Answer: A tax imposed on the value of property.
The most common ad valorem tax is that imposed by states, counties,
and cities on real estate. Ad valorem taxes can be imposed on personal
property as well.
⩥ additional first-year depreciation. Answer: In general, this provision
provides for an additional cost recovery deduction of 100 percent for
qualified property acquired and placed in service after September 27,
2017, and before January 1, 2027. (The bonus depreciation percentage is
reduced by 20 percent for each tax year after 2022.) Qualified property
includes most types of new and used property other than buildings. The
taxpayer can elect to forgo this bonus depreciation. Different rules
applied between 2008 and September 28, 2017. § 168(k).
⩥ adjusted basis. Answer: The cost or other basis of property reduced by
depreciation allowed or allowable and increased by capital
improvements. Other special adjustments are provided in § 1016 and the
related Regulations.
,⩥ allocate. Answer: The assignment of income for various tax purposes.
A multistate corporation's nonbusiness income usually is allocated to the
state where the nonbusiness assets are located; it is not apportioned with
the rest of the entity's income. The income and expense items of an
estate or a trust are allocated between income and corpus components.
Specific items of income, expense, gain, loss, and credit can be allocated
to specific partners if a substantial economic nontax purpose for the
allocation is established.
⩥ alternative depreciation system (ADS). Answer: A cost recovery
system in which the cost or other initial basis of an asset is recovered
using the straight-line method over recovery periods similar to those
used in MACRS. The alternative system must be used in certain
instances and can be elected in other instances. § 168(g).
⩥ amortization. Answer: The tax deduction for the cost or other basis of
an intangible asset over the asset's estimated useful life. Examples of
amortizable intangibles include patents, copyrights, and leasehold
interests. Most purchased intangible assets (e.g., goodwill) can be
amortized for income tax purposes over a 15-year period. § 197.
⩥ amount realized. Answer: The amount received by a taxpayer upon
the sale or exchange of property. Amount realized is the sum of the cash
and the fair market value of any property or services received by the
taxpayer plus any related debt assumed by the buyer. Determining the
, amount realized is the starting point for arriving at realized gain or loss.
§ 1001(b).
⩥ apportioned. Answer: The assignment of the business income of a
multistate corporation to specific states for income taxation. Usually, the
apportionment procedure accounts for the property, payroll, and sales
activity levels of the various states, and a proportionate assignment of
the entity's total income is made using a statutory apportionment
formula. Most states exclude nonbusiness income from the
apportionment procedure; they allocate nonbusiness income to the states
where the nonbusiness assets are located.
⩥ automatic mileage method. Answer: Automobile expenses are
generally deductible only to the extent the automobile is used in business
or for the production of income. Personal commuting expenses are not
deductible. The taxpayer may deduct actual expenses (including
depreciation and insurance), or the standard (automatic) mileage rate
may be used (56 cents per mile for 2021 and 57.5 cents per mile for
2020). Automobile expenses incurred for medical purposes are
deductible to the extent of actual out-of-pocket expenses or at the rate of
16 cents per mile for 2021 and 17 cents per mile for 2020. For charitable
activities, the rate is 14 cents per mile.
⩥ average tax rate. Answer: The average tax rate is equal to the tax
liability divided by taxable income. This rate can be useful in comparing
taxpayers or a taxpayer's changed tax picture from one year to another.
