WGU C237 TAXATION I QUESTIONS WITH VERIFIED
ANSWERS
Describe the history of taxation in the US - Answers - unconstitutional 1895
Sources of Tax Law-Legislative Branch - Answers - - Internal Revenue Code (Top)
- Congressional Committee Reports
Describe the criteria of an equitable tax structure Equity - Answers - Is it Fair
Simplicity - Answers - understandability
Economy - Answers - minimal compliance and administrative costs
-
Convenience - Answers - no burden of records and compliance
Certainty - Answers - Stability and certainty of amount of taxes
Regressive - Answers - decreases as tax base increases
Proportional - Answers - flat tax
Progressive - Answers - tax increases as tax base increases
Gross Income - Answers - Total income - Exclusions
Taxable income - Answers - Gross income-Deductions-Exemptions
Income before tax credits - Answers - Taxable income x tax rate
Total tax liability - Answers - Income before tax credits-tax credits
balance due or refund - Answers - total tax liability - Prepayments
Distinguish between various types of taxes - Answers - State Tax
Local Income
Franchise Tax
Wealth transfer tax
Gift tax
Federal Estate tax
Property tax
, Federal excise tax - customs
Sales Tax
Identify different types of entities that are subject to taxation in the US - Answers - -Tax
paying entities
Individuals
C Corps
-Flow through Entities
sole proprietorship
Partnerships
S Corps
LLC
LL Partnerships
Trusts
Describe the administrative procedures of the IRS - Answers - Enforcement procedures
- verify accuracy and audit
Statute of limitations - 3 years; up to 6 years if off by 25%; no limit for civil fraud
Describe various components of a tax practice - Answers - Tax Compliance and
Procedure
Tax Research
Tax Planning and Consulting
Financial planning
Define each component of the individual income tax formula - Answers - Income
Exclusion - any nontaxable income
Deductions - for AGI - expenses connected with business; from AGI - personal
expenses
Adjusted Gross Income
Itemized Deductions and Standard Deductions
Personal exemption
Taxable Income
Tax Rates and Gross Tax
Credit and prepayments - some credits are refundable
Identify three conditions that must be met for income to be taxable - Answers -
Economic benefit
Realization of Income
Recognition of Income
Identify the primary accounting methods for individual tax purposes - Answers - cash
receipts and disbursements method
accrual method
hybrid method
ANSWERS
Describe the history of taxation in the US - Answers - unconstitutional 1895
Sources of Tax Law-Legislative Branch - Answers - - Internal Revenue Code (Top)
- Congressional Committee Reports
Describe the criteria of an equitable tax structure Equity - Answers - Is it Fair
Simplicity - Answers - understandability
Economy - Answers - minimal compliance and administrative costs
-
Convenience - Answers - no burden of records and compliance
Certainty - Answers - Stability and certainty of amount of taxes
Regressive - Answers - decreases as tax base increases
Proportional - Answers - flat tax
Progressive - Answers - tax increases as tax base increases
Gross Income - Answers - Total income - Exclusions
Taxable income - Answers - Gross income-Deductions-Exemptions
Income before tax credits - Answers - Taxable income x tax rate
Total tax liability - Answers - Income before tax credits-tax credits
balance due or refund - Answers - total tax liability - Prepayments
Distinguish between various types of taxes - Answers - State Tax
Local Income
Franchise Tax
Wealth transfer tax
Gift tax
Federal Estate tax
Property tax
, Federal excise tax - customs
Sales Tax
Identify different types of entities that are subject to taxation in the US - Answers - -Tax
paying entities
Individuals
C Corps
-Flow through Entities
sole proprietorship
Partnerships
S Corps
LLC
LL Partnerships
Trusts
Describe the administrative procedures of the IRS - Answers - Enforcement procedures
- verify accuracy and audit
Statute of limitations - 3 years; up to 6 years if off by 25%; no limit for civil fraud
Describe various components of a tax practice - Answers - Tax Compliance and
Procedure
Tax Research
Tax Planning and Consulting
Financial planning
Define each component of the individual income tax formula - Answers - Income
Exclusion - any nontaxable income
Deductions - for AGI - expenses connected with business; from AGI - personal
expenses
Adjusted Gross Income
Itemized Deductions and Standard Deductions
Personal exemption
Taxable Income
Tax Rates and Gross Tax
Credit and prepayments - some credits are refundable
Identify three conditions that must be met for income to be taxable - Answers -
Economic benefit
Realization of Income
Recognition of Income
Identify the primary accounting methods for individual tax purposes - Answers - cash
receipts and disbursements method
accrual method
hybrid method
