WGU D557 Section 2 | 72 Questions and Answers | Latest
2025/26 Update | 100% Correct.
Correct
Incorrect
WGU D557 Section 2
72 Correct terms
Questions and answers
, Corporations cannot use cash accounting, except for:
S Corps
Farming corporations
Qualified PSCs
Corporations with <$29 million in annual gross receipts
Corporations do not adjust tax losses for capital losses or nonbusiness deductions,
but they can include the dividends received deduction in computing NOLs.
Corporations do not receive favorable tax rates on long-term capital gains. Capital
gains are taxed at the normal corporate tax rate.
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2 of 72
Term
What is the personal holding company (PHC) tax?
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Imposed to prevent sheltering
Designed to prevent corporations
passive income in corporations
from avoiding corporate tax by
owned by individuals with high
leasing assets.
marginal tax rates.
, Imposed to encourage corporations Levied to ensure corporations
to invest in research and distribute earnings to shareholders
development. regularly.
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3 of 72
Term
What restrictions apply to large corporations making estimated
payments?
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If taxable income is less than $1
If taxable income exceeds $10
million, corporations can base
million, corporations cannot use the
payments on the prior year's tax for
prior year's tax for any payments.
all installments.
If taxable income exceeds $1
million, corporations cannot If taxable income exceeds $5 million,
base payments on the prior corporations must base payments on
year's tax, except for the first the current year's tax.
installment.
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4 of 72
Term
, What entries are included in Schedule M-2?
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✔ Add net loss per books ✔ Subtract ✔ Book income not included in
beginning balance of retained taxable Income (e.g., tax-exempt
earnings ✔ Add distributions made interest) ✔ Deductions on Tax return
during the year not expensed in books
✔ Add net income per books ✔
Add beginning balance of ✔ Subtract net loss per books ✔ Add
retained earnings ✔ Subtract dividends paid ✔ Subtract beginning
distributions made during the balance of retained earnings
year
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5 of 72
Term
What is the corporate alternative minimum tax (AMT)?
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Guarantees corporations receive a
Ensures corporations pay a minimum
minimum tax refund, regardless of
dividend tax.
income.
2025/26 Update | 100% Correct.
Correct
Incorrect
WGU D557 Section 2
72 Correct terms
Questions and answers
, Corporations cannot use cash accounting, except for:
S Corps
Farming corporations
Qualified PSCs
Corporations with <$29 million in annual gross receipts
Corporations do not adjust tax losses for capital losses or nonbusiness deductions,
but they can include the dividends received deduction in computing NOLs.
Corporations do not receive favorable tax rates on long-term capital gains. Capital
gains are taxed at the normal corporate tax rate.
Don't know?
2 of 72
Term
What is the personal holding company (PHC) tax?
Give this one a try later!
Imposed to prevent sheltering
Designed to prevent corporations
passive income in corporations
from avoiding corporate tax by
owned by individuals with high
leasing assets.
marginal tax rates.
, Imposed to encourage corporations Levied to ensure corporations
to invest in research and distribute earnings to shareholders
development. regularly.
Don't know?
3 of 72
Term
What restrictions apply to large corporations making estimated
payments?
Give this one a try later!
If taxable income is less than $1
If taxable income exceeds $10
million, corporations can base
million, corporations cannot use the
payments on the prior year's tax for
prior year's tax for any payments.
all installments.
If taxable income exceeds $1
million, corporations cannot If taxable income exceeds $5 million,
base payments on the prior corporations must base payments on
year's tax, except for the first the current year's tax.
installment.
Don't know?
4 of 72
Term
, What entries are included in Schedule M-2?
Give this one a try later!
✔ Add net loss per books ✔ Subtract ✔ Book income not included in
beginning balance of retained taxable Income (e.g., tax-exempt
earnings ✔ Add distributions made interest) ✔ Deductions on Tax return
during the year not expensed in books
✔ Add net income per books ✔
Add beginning balance of ✔ Subtract net loss per books ✔ Add
retained earnings ✔ Subtract dividends paid ✔ Subtract beginning
distributions made during the balance of retained earnings
year
Don't know?
5 of 72
Term
What is the corporate alternative minimum tax (AMT)?
Give this one a try later!
Guarantees corporations receive a
Ensures corporations pay a minimum
minimum tax refund, regardless of
dividend tax.
income.
