WGU - C237 - TAXATION 1 UPDATED
Exam Questions and CORRECT Answers
Second-highest level of legislative authority of tax? - CORRECT ANSWER - Internal
Revenue Code
In which publication does the IRS provide info on tax consequences of specific transactions? -
CORRECT 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? - CORRECT ANSWER - $10,620
Which tax is based on the value of an individual's real estate? - CORRECT ANSWER -
Property Tax
Flow-through entities in the U.S. tax system? - CORRECT 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?
- CORRECT 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? - CORRECT 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? - CORRECT 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? - CORRECT 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? -
CORRECT ANSWER - $19,943
Which scenario represents a realization of income? - CORRECT ANSWER - A payment
of $2,000 for stocks sold
Which type of income satisfies all three requirements for the income to be taxable? - CORRECT
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? - CORRECT 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? - CORRECT ANSWER - Royalties
Which source of income is included in gross income? - CORRECT ANSWER - Rental
What is it called when a person attempts to not pay federal income taxes by willfully excluding
taxable income? - CORRECT ANSWER - Tax Evasion
Exam Questions and CORRECT Answers
Second-highest level of legislative authority of tax? - CORRECT ANSWER - Internal
Revenue Code
In which publication does the IRS provide info on tax consequences of specific transactions? -
CORRECT 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? - CORRECT ANSWER - $10,620
Which tax is based on the value of an individual's real estate? - CORRECT ANSWER -
Property Tax
Flow-through entities in the U.S. tax system? - CORRECT 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?
- CORRECT 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? - CORRECT 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? - CORRECT 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? - CORRECT 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? -
CORRECT ANSWER - $19,943
Which scenario represents a realization of income? - CORRECT ANSWER - A payment
of $2,000 for stocks sold
Which type of income satisfies all three requirements for the income to be taxable? - CORRECT
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? - CORRECT 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? - CORRECT ANSWER - Royalties
Which source of income is included in gross income? - CORRECT ANSWER - Rental
What is it called when a person attempts to not pay federal income taxes by willfully excluding
taxable income? - CORRECT ANSWER - Tax Evasion
