2026 WGU C237 Taxation I Pre-assessment (Latest Update)
|Questions and Correct Verified Answers/C237 Taxation 1 Latest
2026 Version!!!
Which scenario represents a realization of income?
A) A bank loan of $2,000
B) A payment of $2,000 for stocks sold
C) An offer to buy a boat for $2,000
D) An increase in stock value of $2,000
B) A payment of $2,000 for stocks sold
Which type of income satisfies all three requirements for the
income to be taxable?
A) Receiving a $5,000 gift
B) Renting out a condo for $5,000
C) Inheriting $5,000 in gold coins
D) Obtaining a $5,000 loan from the bank
B) Renting out a condo for $5,000
What year was the U.S. income tax on individuals permanently
established?
A) 1861
B) 1894
C) 1913
C) 1913
What is the second-highest level of legislative authority of tax law
in the United States?
A) American Institute of Certified Public Accountants (AICPA)
B) Journal of Taxation
pg. 1
,C) Revenue procedures
D) Internal Revenue Code
Internal Revenue Code
In which publications does the IRS provide information on the
tax consequences of specific transactions encountered in practice?
A) Technical advice memoranda
B) Information releases
C) Revenue rulings
D) Official announcements
C) Revenue rulings
What is an example of equity when evaluating a tax system?
A) Each taxpayer can choose the due date for their tax.
B) Each taxpayer pays a different amount based on their income level.
C) Individuals have designated amounts withheld from each pay
check.
D) Individuals may take a standard deduction to reduce record
keeping.
B) Each taxpayer pays a different amount based on their income level.
What is true about horizontal equity?
A) Taxpayers with a greater ability to pay tax paying more tax
B) Two taxpayers in similar situations paying the same tax
C) Taxpayers with a lesser ability to pay tax paying more tax
D) Horizontal equity does not exist in a federal tax structure.
B) Two taxpayers in similar situations paying the same tax
What is the nature of a progressive tax rate structure?
pg. 2
,A) Each taxpayer devotes the same percentage of income to pay the
tax.
B) Lower-income taxpayers devote a greater percentage of income to
pay the tax relative to higher-income individuals.
C) The rate of tax increases as the tax base increases.
D) The rate of tax decreases as the tax base increases.
C) The rate of tax increases as the tax base increases.
Which tax rate structure is exemplified by the FICA portion of
Social Security taxes?
A) Effective
B) Regressive
C) Progressive
D) Proportional
B) Regressive
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?
A) $6,682
B) $10,620
C) $10,818
D) $14,889
B) $10,620
In which situation has a taxpayer actually or constructively
received income that should be included in gross income for the
current year?
pg. 3
, A) The taxpayer purchased and is holding stock that increased in
value by $1,000 during the year.
B) In December the taxpayer negotiates the sale of his stamp
collection for a profit of $2,400, but the contract states he will not
receive payment from the buyer until the following February.
C) 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.
D) On December 28 the taxpayer sells his coworker a used car. The
buyer gives the taxpayer a check-in payment, asking him to wait two
weeks before depositing the check because there will be insufficient
funds in the account until that time.
C) 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?
A) Royalties
B) Alimony
C) Child support
D) Qualified Roth IRA
A) Royalties
Which source of income is included in gross income?
A) Rental
B) Inheritance received
C) Life insurance proceeds
D) Personal injury compensation
pg. 4
|Questions and Correct Verified Answers/C237 Taxation 1 Latest
2026 Version!!!
Which scenario represents a realization of income?
A) A bank loan of $2,000
B) A payment of $2,000 for stocks sold
C) An offer to buy a boat for $2,000
D) An increase in stock value of $2,000
B) A payment of $2,000 for stocks sold
Which type of income satisfies all three requirements for the
income to be taxable?
A) Receiving a $5,000 gift
B) Renting out a condo for $5,000
C) Inheriting $5,000 in gold coins
D) Obtaining a $5,000 loan from the bank
B) Renting out a condo for $5,000
What year was the U.S. income tax on individuals permanently
established?
A) 1861
B) 1894
C) 1913
C) 1913
What is the second-highest level of legislative authority of tax law
in the United States?
A) American Institute of Certified Public Accountants (AICPA)
B) Journal of Taxation
pg. 1
,C) Revenue procedures
D) Internal Revenue Code
Internal Revenue Code
In which publications does the IRS provide information on the
tax consequences of specific transactions encountered in practice?
A) Technical advice memoranda
B) Information releases
C) Revenue rulings
D) Official announcements
C) Revenue rulings
What is an example of equity when evaluating a tax system?
A) Each taxpayer can choose the due date for their tax.
B) Each taxpayer pays a different amount based on their income level.
C) Individuals have designated amounts withheld from each pay
check.
D) Individuals may take a standard deduction to reduce record
keeping.
B) Each taxpayer pays a different amount based on their income level.
What is true about horizontal equity?
A) Taxpayers with a greater ability to pay tax paying more tax
B) Two taxpayers in similar situations paying the same tax
C) Taxpayers with a lesser ability to pay tax paying more tax
D) Horizontal equity does not exist in a federal tax structure.
B) Two taxpayers in similar situations paying the same tax
What is the nature of a progressive tax rate structure?
pg. 2
,A) Each taxpayer devotes the same percentage of income to pay the
tax.
B) Lower-income taxpayers devote a greater percentage of income to
pay the tax relative to higher-income individuals.
C) The rate of tax increases as the tax base increases.
D) The rate of tax decreases as the tax base increases.
C) The rate of tax increases as the tax base increases.
Which tax rate structure is exemplified by the FICA portion of
Social Security taxes?
A) Effective
B) Regressive
C) Progressive
D) Proportional
B) Regressive
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?
A) $6,682
B) $10,620
C) $10,818
D) $14,889
B) $10,620
In which situation has a taxpayer actually or constructively
received income that should be included in gross income for the
current year?
pg. 3
, A) The taxpayer purchased and is holding stock that increased in
value by $1,000 during the year.
B) In December the taxpayer negotiates the sale of his stamp
collection for a profit of $2,400, but the contract states he will not
receive payment from the buyer until the following February.
C) 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.
D) On December 28 the taxpayer sells his coworker a used car. The
buyer gives the taxpayer a check-in payment, asking him to wait two
weeks before depositing the check because there will be insufficient
funds in the account until that time.
C) 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?
A) Royalties
B) Alimony
C) Child support
D) Qualified Roth IRA
A) Royalties
Which source of income is included in gross income?
A) Rental
B) Inheritance received
C) Life insurance proceeds
D) Personal injury compensation
pg. 4
