WGU C237 Taxation I Pre-assessment (Latest 2026 Update)
|Questions and Correct Verified Answers/C237 Taxation 1
Already Graded A+
Which tax is based on the value of an individual's real estate?
A) Property tax
B) Franchise tax
C) Federal estate tax
D) Wealth transfer tax
A) Property tax
Which entities are considered flow-through entities in the U.S. tax
system?
A) Individual taxpayers
B) Religious associations
C) Regular C corporations
D) Limited liability partnerships
D) Limited liability partnerships
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?
A) 3 years
B) 4 years
C) 5 years
D) 6 years
D) 6 years
Which component of a tax practice focuses on minimizing taxes
paid and maximizing after-tax cash flows while accommodating
clients' other desires?
pg. 1
,A) Tax planning
B) Tax research
C) Tax procedure
D) Tax compliance
A) Tax planning
Which tax term defines a personal expenditure, such as charitable
contributions and medical expenses, which taxpayers may claim if
they keep records?
A) Itemized deductions
B) Standard deductions
C) Personal exemptions
D) Dependency exemptions
A) 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?
A) $4,295
B) $4,355
C) $6,298
D) $6,529
A) $4,295
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
pg. 2
,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?
A) $19,943
B) $20,207
C) $20,275
D) $20,539
A) $19,943
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
pg. 3
, 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
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
pg. 4
|Questions and Correct Verified Answers/C237 Taxation 1
Already Graded A+
Which tax is based on the value of an individual's real estate?
A) Property tax
B) Franchise tax
C) Federal estate tax
D) Wealth transfer tax
A) Property tax
Which entities are considered flow-through entities in the U.S. tax
system?
A) Individual taxpayers
B) Religious associations
C) Regular C corporations
D) Limited liability partnerships
D) Limited liability partnerships
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?
A) 3 years
B) 4 years
C) 5 years
D) 6 years
D) 6 years
Which component of a tax practice focuses on minimizing taxes
paid and maximizing after-tax cash flows while accommodating
clients' other desires?
pg. 1
,A) Tax planning
B) Tax research
C) Tax procedure
D) Tax compliance
A) Tax planning
Which tax term defines a personal expenditure, such as charitable
contributions and medical expenses, which taxpayers may claim if
they keep records?
A) Itemized deductions
B) Standard deductions
C) Personal exemptions
D) Dependency exemptions
A) 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?
A) $4,295
B) $4,355
C) $6,298
D) $6,529
A) $4,295
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
pg. 2
,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?
A) $19,943
B) $20,207
C) $20,275
D) $20,539
A) $19,943
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
pg. 3
, 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
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
pg. 4
