1|Page
WGU C239 OBJECTIVE ASSESSMENT AND PRE -
ASSESSMENT LATEST 2026 TEST BANK| C239
ADVANCED TAX CONCEPTS OA & PA EXAM WITH
COMPLETE 400 REAL EXAM QUESTIONS AND
CORRECT VERIFIED ANSWERS/ ALREADY GRADED
A+ (BRAND NEW!!)
Which partnership item would flow through to an individual's tax
return?
A. Capital gains
B. Gross income
C. Partnership exemptions
D. Dividends received deduction - Correct Answer -Capital Gains
An investor purchased 100 shares of Corporation Y stock on January 1,
2013 for $1,000. On January 1, 2014 the investor sells 25 shares of
Corporation Y stock for $200.
How should the sale of shares on January 1, 2014 be classified?
A. Long-term capital gain
B. Long-term capital loss
C. Short-term capital gain
D. Short-term capital loss - Correct Answer -Short-term capital loss
pg. 1
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A non-corporate taxpayer has two transactions involving the sale of
capital assets during the year. As a result of the transactions, he has a
short-term capital gain of $2,000 and a long-term capital loss of $6,000.
A corporate taxpayer has the identical transactions occur during the year.
Which amounts will be added or deducted from ordinary income for the
non-corporate and corporate taxpayer capital gains, respectively?
A. $4,000 deduction, $4,000 deduction
B. $5,000 deduction, $3,000 deduction
C. $3,000 deduction, no deduction or addition
D. No deduction or addition, $3,000 deduction - Correct Answer -$3,000
deduction, no deduction or addition
How much of the excess is offset against ordinary income for an
individual taxpayer on a dollar-for-dollar basis if net long-term capital
losses exceed net short-term capital gains?
A. $1,000
B. $2,000
C. $3,000
D. $4,000 - Correct Answer -$3,000
A client owns an apartment building with a fair market value of
$250,000, an adjusted basis of $175,000, and a mortgage of $150,000.
The client exchanges the building and $40,000 cash for a different
apartment that has a fair market value of $220,000. The client assumes
the $80,000 mortgage on the building to be acquired.
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Which tax amount will the client realize as a result of the exchange?
A. $0 gain or loss
B. $30,000 gain
C. $45,000 gain
D. $75,000 gain - Correct Answer -$75,000 gain
A taxpayer's bowling alley (basis of $600,000) is destroyed by fire, and
he receives $800,000 in insurance proceeds. The taxpayer will spend
$1,000,000 to build another bowling alley.
How much is the gain and could it be deferred under the functional-use
test?
A. $200,000 gain; could defer
B. $200,000 gain; could not defer
C. $400,000 gain; could defer
D. $400,000 gain; could not defer - Correct Answer -$200,000 gain;
could defer
A taxpayer's gains and losses pertaining to business assets for the year
are as follows:
Gain due to insurance reimbursement for vehicle theft: $20,000
Loss due to insurance reimbursement for fire damage to a building:
$(7,000)
Gain due to building condemnation: $2,000
Loss on sale of investment property: $(18,000)
pg. 3
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There are no non-recaptured net section 1231 losses from previous
years.
What is the tax treatment for the casualty and theft transactions?
A. Ordinary gain of $20,000
B. Ordinary loss of $25,000
C. Net section 1231 loss of $3,000
D. Net section 1231 gain of $13,000 - Correct Answer -Net section 1231
gain of $13,000
Business A is a calendar-year taxpayer and purchased office equipment
for $10 million on March 1, 2018. The items were placed in service on
May 1, 2018. The asset has a 10-year recovery period for GAAP
accounting purposes.
What is the amount of 2018 tax cost recovery on this asset?
A. $500,000
B. $952,381
C. $1,000,000
D. $1,428,571 - Correct Answer -$1,428,571 This is somewhat tricky. It
states that it is 10yr for book, but it is only 7yr for tax. MACRS for 7yr
is 14.29% so 10,000,000 x 14.29%= 1,429,000
A taxpayer performs legal services (fair market value of $50,000) to a
corporation in exchange for 10% of its stock (fair market value of
$70,000).
pg. 4
WGU C239 OBJECTIVE ASSESSMENT AND PRE -
ASSESSMENT LATEST 2026 TEST BANK| C239
ADVANCED TAX CONCEPTS OA & PA EXAM WITH
COMPLETE 400 REAL EXAM QUESTIONS AND
CORRECT VERIFIED ANSWERS/ ALREADY GRADED
A+ (BRAND NEW!!)
Which partnership item would flow through to an individual's tax
return?
A. Capital gains
B. Gross income
C. Partnership exemptions
D. Dividends received deduction - Correct Answer -Capital Gains
An investor purchased 100 shares of Corporation Y stock on January 1,
2013 for $1,000. On January 1, 2014 the investor sells 25 shares of
Corporation Y stock for $200.
How should the sale of shares on January 1, 2014 be classified?
A. Long-term capital gain
B. Long-term capital loss
C. Short-term capital gain
D. Short-term capital loss - Correct Answer -Short-term capital loss
pg. 1
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A non-corporate taxpayer has two transactions involving the sale of
capital assets during the year. As a result of the transactions, he has a
short-term capital gain of $2,000 and a long-term capital loss of $6,000.
A corporate taxpayer has the identical transactions occur during the year.
Which amounts will be added or deducted from ordinary income for the
non-corporate and corporate taxpayer capital gains, respectively?
A. $4,000 deduction, $4,000 deduction
B. $5,000 deduction, $3,000 deduction
C. $3,000 deduction, no deduction or addition
D. No deduction or addition, $3,000 deduction - Correct Answer -$3,000
deduction, no deduction or addition
How much of the excess is offset against ordinary income for an
individual taxpayer on a dollar-for-dollar basis if net long-term capital
losses exceed net short-term capital gains?
A. $1,000
B. $2,000
C. $3,000
D. $4,000 - Correct Answer -$3,000
A client owns an apartment building with a fair market value of
$250,000, an adjusted basis of $175,000, and a mortgage of $150,000.
The client exchanges the building and $40,000 cash for a different
apartment that has a fair market value of $220,000. The client assumes
the $80,000 mortgage on the building to be acquired.
pg. 2
,3|Page
Which tax amount will the client realize as a result of the exchange?
A. $0 gain or loss
B. $30,000 gain
C. $45,000 gain
D. $75,000 gain - Correct Answer -$75,000 gain
A taxpayer's bowling alley (basis of $600,000) is destroyed by fire, and
he receives $800,000 in insurance proceeds. The taxpayer will spend
$1,000,000 to build another bowling alley.
How much is the gain and could it be deferred under the functional-use
test?
A. $200,000 gain; could defer
B. $200,000 gain; could not defer
C. $400,000 gain; could defer
D. $400,000 gain; could not defer - Correct Answer -$200,000 gain;
could defer
A taxpayer's gains and losses pertaining to business assets for the year
are as follows:
Gain due to insurance reimbursement for vehicle theft: $20,000
Loss due to insurance reimbursement for fire damage to a building:
$(7,000)
Gain due to building condemnation: $2,000
Loss on sale of investment property: $(18,000)
pg. 3
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There are no non-recaptured net section 1231 losses from previous
years.
What is the tax treatment for the casualty and theft transactions?
A. Ordinary gain of $20,000
B. Ordinary loss of $25,000
C. Net section 1231 loss of $3,000
D. Net section 1231 gain of $13,000 - Correct Answer -Net section 1231
gain of $13,000
Business A is a calendar-year taxpayer and purchased office equipment
for $10 million on March 1, 2018. The items were placed in service on
May 1, 2018. The asset has a 10-year recovery period for GAAP
accounting purposes.
What is the amount of 2018 tax cost recovery on this asset?
A. $500,000
B. $952,381
C. $1,000,000
D. $1,428,571 - Correct Answer -$1,428,571 This is somewhat tricky. It
states that it is 10yr for book, but it is only 7yr for tax. MACRS for 7yr
is 14.29% so 10,000,000 x 14.29%= 1,429,000
A taxpayer performs legal services (fair market value of $50,000) to a
corporation in exchange for 10% of its stock (fair market value of
$70,000).
pg. 4
