WGU D558
OBJECTIVE ASSESSMENT-STYLE
PRACTICE EXAM
70 Original Multiple-Choice Questions
Correct Answers and Detailed Rationales
Partnership Taxation • S Corporation Rules • Section 199A
2026 ALIGNED • UNOFFICIAL STUDY SIMULATION
,WGU D558 • OA-STYLE PRACTICE ASSESSMENT • UNOFFICIAL
Assessment Blueprint
This is an original practice assessment aligned to the competencies published in the WGU D558 Pass-Through Taxation
syllabus. It is not an official WGU exam, does not reproduce secure assessment items, and should not be interpreted as a
guarantee of the live OA question count, weighting, wording, or cut score.
Domain Questions Practice share Primary skills
Partnerships 1-28 40% Formation, basis, liabilities, operations, distributions, transfers, hot
assets, section 754
S Corporations 29-59 44% Eligibility, elections, allocation, stock/debt basis, AAA/AEP, distributions,
penalty taxes
Section 199A 60-70 16% QBI, SSTBs, wage/UBIA limits, overall limit, owner-payment exclusions
Suggested use
For a timed attempt, cover each answer box and allow about 100 seconds per item. Read the final sentence first, label the
entity and account being tested, calculate independently, and then compare with the rationale. A practical target is at least
80% overall and at least 75% in every domain before taking a proctored assessment.
Tax-year note: Annual thresholds and phase-in ranges can change. Questions involving Section 199A either provide the
necessary facts or test durable mechanics without requiring memorization of a current-year threshold.
2026 Practice Edition | 2
, WGU D558 • OA-STYLE PRACTICE ASSESSMENT • UNOFFICIAL
Domain I - Partnership Taxation and Distributions
Questions 1-28 • Formation, operations, basis, distributions, transfers, and terminations
1. Avery contributes $30,000 cash and land with an adjusted basis of $45,000 and a fair market value (FMV) of
$80,000 to a partnership. No liabilities exist. What is Avery's initial outside basis?
A. $45,000
B. $75,000
C. $110,000
D. $155,000
Correct answer: B
Rationale: Outside basis starts with cash plus the adjusted basis of contributed property: $30,000 + $45,000 =
$75,000. FMV does not replace carryover basis.
2. Blake contributes property with a $70,000 adjusted basis, $120,000 FMV, and a $40,000 mortgage assumed
by the partnership. Blake's post-contribution share of partnership liabilities is $15,000. What is Blake's initial
outside basis?
A. $30,000
B. $45,000
C. $70,000
D. $85,000
Correct answer: B
Rationale: Start with $70,000, subtract the $40,000 deemed cash distribution for liability relief, and add the $15,000
liability share: $45,000.
3. Cora contributes equipment with a $22,000 adjusted basis and $60,000 FMV. What basis does the
partnership generally take in the equipment?
A. $0
B. $22,000
C. $38,000
D. $60,000
Correct answer: B
Rationale: Under the carryover-basis rule, the partnership generally takes the contributor's $22,000 adjusted basis.
This is inside basis.
2026 Practice Edition | 3
OBJECTIVE ASSESSMENT-STYLE
PRACTICE EXAM
70 Original Multiple-Choice Questions
Correct Answers and Detailed Rationales
Partnership Taxation • S Corporation Rules • Section 199A
2026 ALIGNED • UNOFFICIAL STUDY SIMULATION
,WGU D558 • OA-STYLE PRACTICE ASSESSMENT • UNOFFICIAL
Assessment Blueprint
This is an original practice assessment aligned to the competencies published in the WGU D558 Pass-Through Taxation
syllabus. It is not an official WGU exam, does not reproduce secure assessment items, and should not be interpreted as a
guarantee of the live OA question count, weighting, wording, or cut score.
Domain Questions Practice share Primary skills
Partnerships 1-28 40% Formation, basis, liabilities, operations, distributions, transfers, hot
assets, section 754
S Corporations 29-59 44% Eligibility, elections, allocation, stock/debt basis, AAA/AEP, distributions,
penalty taxes
Section 199A 60-70 16% QBI, SSTBs, wage/UBIA limits, overall limit, owner-payment exclusions
Suggested use
For a timed attempt, cover each answer box and allow about 100 seconds per item. Read the final sentence first, label the
entity and account being tested, calculate independently, and then compare with the rationale. A practical target is at least
80% overall and at least 75% in every domain before taking a proctored assessment.
Tax-year note: Annual thresholds and phase-in ranges can change. Questions involving Section 199A either provide the
necessary facts or test durable mechanics without requiring memorization of a current-year threshold.
2026 Practice Edition | 2
, WGU D558 • OA-STYLE PRACTICE ASSESSMENT • UNOFFICIAL
Domain I - Partnership Taxation and Distributions
Questions 1-28 • Formation, operations, basis, distributions, transfers, and terminations
1. Avery contributes $30,000 cash and land with an adjusted basis of $45,000 and a fair market value (FMV) of
$80,000 to a partnership. No liabilities exist. What is Avery's initial outside basis?
A. $45,000
B. $75,000
C. $110,000
D. $155,000
Correct answer: B
Rationale: Outside basis starts with cash plus the adjusted basis of contributed property: $30,000 + $45,000 =
$75,000. FMV does not replace carryover basis.
2. Blake contributes property with a $70,000 adjusted basis, $120,000 FMV, and a $40,000 mortgage assumed
by the partnership. Blake's post-contribution share of partnership liabilities is $15,000. What is Blake's initial
outside basis?
A. $30,000
B. $45,000
C. $70,000
D. $85,000
Correct answer: B
Rationale: Start with $70,000, subtract the $40,000 deemed cash distribution for liability relief, and add the $15,000
liability share: $45,000.
3. Cora contributes equipment with a $22,000 adjusted basis and $60,000 FMV. What basis does the
partnership generally take in the equipment?
A. $0
B. $22,000
C. $38,000
D. $60,000
Correct answer: B
Rationale: Under the carryover-basis rule, the partnership generally takes the contributor's $22,000 adjusted basis.
This is inside basis.
2026 Practice Edition | 3
