(Summary) WGU - C237 - TAXATION 1, With Complete Verified Solution 2024, Updated.

(Summary) WGU - C237 - TAXATION 1, With Complete Verified Solution 2024, Updated. 30 Number of days that are initially given to an audited individual or business to either request a conference with an appeals officer or agree to the proposed adjustment. (Ch 2-6) 90 Number of days that are given to an audited individual or business after the appeals conference to either pay the proposed deficiency or file a petition in the US Tax Court to hear the case. (Ch 2-6) 12 Month Rule A regulation that allows prepaid business expenses to be currently deducted when the contract does not extend beyond a specific numbers of months and the contract period does not extend beyond the end of the tax year following the year of the payment. (Ch 6-15) 1231 Assets Depreciable or real property used in a taxpayers trade or business owned for more than one year. (Ch 11-8) 1231 Look Back Rule A tax rule requiring taxpayers to treat current year net (Ch 11-18) 1245 Property Tangible personal property and intangible property subject to cost recovery deductions. (Ch 11-10) 1250 Property Real property subject to cost recovery deductions. (Ch 11-14) 291 Depreciation Recapture The portion of a corporate taxpayer's gain on real property that is converted from 1231 gain to ordinary income. (Ch 11-14) 481 Adjustment A change to taxable income associated with a change in accounting methods. (Ch 9-30) Abandoned Spouse A married taxpayer who lives apart from the spouse for the last 6 months of the year, who files a tax return separate from the spouse, and who maintains a household for a qualifying child. (Ch 4-24) Accelerated Death Benefits Early receipt of life insurance proceeds that are not taxable un certain circumstances, such as the taxpayer is medically certified with an illness that is expected to cause death within 24 months. (Ch 5-28) Accountable Plan An Employer's reimbursement plan under which employees must submit documentation supporting expenses to receive reimbursement and reimbursements are limited to legitimate business expenses. (Ch 5-23) Accounting Methods The procedure for determining the taxable year in which a business recognizes a particular item of income or deduction, thereby dictating the timing of when a taxpayer reports income and deductions. (Ch 9-14) Accounting Period A fixed period of time win which a business reports income and deductions. (Ch 9-13) Accrual Method A method of accounting that generally recognizes income in the period earned and recognizes deductions in the period that liabilities are incurred. (Ch 5-6) Accumulated Earnings Tax A tax assessed on corporations that retain earning without a business reason to do so. (Ch 15-3) Acquiescence Issued after the IRS loses a trial-level or circuit court case where the IRS doesn't necessarily agree with the court's ruling, but chooses to no longer litigate the issue. (Ch 2-17) Action on Decision An IRS pronouncement that explains the background reasoning behind an IRS acquiescence or nonacquiescence . (Ch 2-17) Ad Valorem A type of tax based on the value of property. (Ch 1-15) Additional Medicare Tax A tax imposed at a rate of .9% for salary or wages or net self-employment earning in excess of $200,000. (Ch 8-14) Adjusted Basis An asset's carrying value for tax purposes at a given point in time, measured as the initial basis plus capital improvements less depreciation or amortization. (Ch 10-1,11-5) Adjusted Gross Income Gross income less specific "above the line" deductions. It is an important reference point in the income tax formula. (Ch 4-2) After Tax Rate of Return A taxpayer's before-tax rate of return on an investment minus the taxes paid on the income from the investment. (Ch 3-3) Alimony A support payment of cash made to a former spouse. (Ch 5-14) All Events Test Requires that income or expenses are recognized when all events have occurred that determine or fix the right to receive the income or liability to make the payments and the amount of the income or expense can be determined with reasonable accuracy. (Ch 9-21) All Inclusive Income A concept that says: Gross income means all income from whatever source derived. (Ch 4-2) Allowance Method Method used for financial reporting purposes; under this method, bad debt expense is based on an estimate of the amount of the bad debts in AR at YE. (Ch 9-25) Alternative Minimum Tax A tax that is designed to require taxpayers to pay some specific level of tax even when they have low or no regular taxable income as a result of certain tax breaks in the tax code. (Ch 4-11) Alternative Minimum Tax Adjustments Adjustments, either positive or negative, to regular taxable income to arrive at the alternative minimum tax base. (Ch 8-9) Alternative Minimum Tax System A system that was designed to ensure that taxpayers generating economic income pay some minimum amount of income tax each year. (Ch 8-8) Alternative Minimum Tax Base Alternative minimum taxable income minus the alternative minimum tax exemption. (Ch 8-8) Amortization The method of recovering the cost of intangible assets over a specific time period. (Ch 10-1) Amount Realized The value of everything received by the seller in a transaction less selling costs. (Ch 11-2) Analyze Tax Authorities Step 4 of tax research. (Ch 2-18) Annuity A stream of equal payments over time. (Ch 5-11) Annotated A type of tax service arranged by code section where many types of relevant supporting documents may be found. (Ch 2-18) Arms Length A type of transaction among unrelated taxpayers in which each transacting party negotiates for his or her own benefit. (Ch 3-12) Arms Length Amount Price in transactions among unrelated taxpayers, where each transacting party negotiates for his or her own benefit. (Ch 9-4) Assignment of Income Doctrine A judicial doctrine in which earned income is taxed to the taxpayer providing the service, and that income from property is taxed to the individual who owns the property when the income accrues. (Ch 3-12, 5-8) Average Tax Rate The tax rate that applies to the taxpayer's average level of taxation on each dollar of taxable income. (Ch 1-7) Barter Clubs Organizations that facilitate the exchange of rights to goods and services between members. (Ch 5-4) Before Tax Rate of Return A taxpayer's rate of return on an investment before paying taxes on the income from the investment. (Ch 3-16) Boot Property given or received in an otherwise nontaxable transaction such as a like-kind exchange that may trigger gain to a party to the transaction. An expression describing additional property a party to an exchange might throw in "to boot" to equalize the exchange. (Ch 11-26) Bracket A subset or portion of the tax base subject to a specific tax rate. (Ch 1-5) Bunching Itemized Deductions A common planning strategy in which a taxpayer pays two years worth of itemized expenses in one year to exceed the standard deduction in that year. (Ch 6-25) Business Activity A profit-motivated activity that requires a relatively high level of involvement or effort from the taxpayer to generate income. (Ch 6-2) Business Purpose A type of judicial doctrine in which the IRS is allowed to challenge and disallow business expenses for transactions with no underlying business motivation. (Ch 3-18) Business Tax Credits Nonrefundable credits designed to provide incentives for taxpayers to hire certain types of individuals or to participate in certain business activities. (Ch 8-31) Capital Assets In general, an asset other than an asset used in a trade or business or an asset such as an account or not receivable acquired in a business from the sale of services or property (Ch 7-2) Capital Gain Property Any asset that would have generated a long-term capital gain if the taxpayer had sold the property for it fair market value. (Ch 6-17) Cash Method The method of accounting that recognizes income in the period in which cash, property;, or services are received and recognizes deductions in the period paid. (Ch 5-6) Casualty Losses A loss that can result from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake, or volcanic eruption. (Ch 9-12) Ceiling A limitation that is the maximum amount for adjustments to taxable income (or credits). (Ch 6-18) Certainty Refers to the ability of taxpayers to determine when, where, and how much tax to pay. (Ch 1-22) Character of Income Includes ordinary, capital, and qualified dividend. (Ch 4-6) Child Tax Credits A credit that is given to taxpayers for each dependent child under the age of 17 at the end of the tax year. (Ch 8-24) Circular 230 Regulations issued by the IRS that govern tax practice and apply to all persons practicing before the IRS that contains 5 parts. (Ch 2-24) Citator A research tool that allows one to check the status of several types of tax authorities. (Ch 2-21) Civil A type of penalty that is of a monetary value which is imposed on tax practitioners or taxpayers who violate the tax statues without reasonable cause. (Ch 2-26) Claim of Right Doctrine A judicial doctrine that states income has been realized if a taxpayer receives income and there are no restriction on the taxpayer's use of the income. (Ch 5-7) Collectibles A type of capital asset that includes art, rugs, antiques, stamps, or coin held for investment for more than one year. (Ch 7-2) Community Property System A system in which state laws dictate how the income and property is legally shared between a husband and wife. (Ch 5-8) Constructive Receipt A judicial doctrine in which a taxpayer must recognize income when it is actually received. (Ch 3-10, 5-7) Convenience A tax system that is designed to facilitate the collection of tax revenues without undue hardship on the taxpayer of the government. (Ch 1-22) Correspondence A type of IRS audit examination that is conducted by mail and generally limited to one or two items on the taxpayer's return. (Ch 2-5) Cost Recovery The method by which a company expenses the cost of acquiring capital assets by depreciation, amortization, or depletion. (Ch 10-1) Criminal A type of penalty that is of a monetary value which is imposed or charged most commonly in tax evasion cases. (Ch 2-26) Deduction for Qualified Business Income Equal to 20% of the taxpayer's qualified business income. (Ch 6-26) Deductions These reduce a taxpayer's taxable income and are not allowed unless a specific tax law allows them. (Ch 4-7) Deductions Above the Line For AGI deductions or deductions subtracted from gross income to determine AGI. (Ch 4-7) Deductions Below the Line From AGI deductions or deductions subtracted from AGI to calculate taxable income. (Ch 4-8) Deferrals Realized income that will be taxed as income in a subsequent year. (Ch 4-5) Deferred Like Kind Exchange An exchange where the taxpayer transfers property before receiving the property in exchange. (Ch 11-25)