WGU C237 Taxation I Exam 244 Questions with
Verified Answers
Flat tax (income or excise) - CORRECT ANSWER Define Proportional Tax Rate
increasing marginal tax rate as the tax base increases (US Federal Income Tax) -
CORRECT ANSWER Define Progressive Tax Rate
decreasing marginal tax rate as the tax base increases (Social Security) - CORRECT
ANSWER Define Regressive Tax Rate
a. C Corporation - CORRECT ANSWER Which of the following is taxed at the entity
level?
a. C corporation
b. S corporation
c. General partnership
d. LLC
c. Treasury Regulations - CORRECT ANSWER What has the second highest
administrative authority?
a. Internal Revenue Code
b. Tax Treaties
c. Treasury Regulations
,d. CCH
a. Single - CORRECT ANSWER Matt has a taxable income of $19,000. He has no
children What is his best tax filing status?
a. Single
b. Head of Household
c. Married Filing Joint
d. Qualified Widow
Primary are official sources of tax law while secondary are unofficial tax
authorities - CORRECT ANSWER What is the difference between primary and
secondary law sources?
Sufficiency, Equity, Certainty, Convenience, Economy - CORRECT ANSWER What
criteria is used to evaluate how good a tax system is?
True - CORRECT ANSWER T/F: Virtually every transaction involves the taxpayer and
two other parties that have an interest in the tax ramifications of the transaction.
d. A cash-basis business delaying billing its customer until after year-end -
CORRECT ANSWER Which of the following is an example of the timing strategy?
a. A corporation paying its shareholders a $20,000 dividend
b. A parent employing her child in the family business
c. A taxpayer gifting stock to his children
d. A cash-basis business delaying billing its customer until after year-end
,True - CORRECT ANSWER T/F: For purposes of determining filing status, a
taxpayer's marital status is determined on the last day of the tax year in question.
a. $60,000 - CORRECT ANSWER Joanna received $60,000 compensation from her
employer, the value of her stock in ABC company appreciated by $5,000 during
the year (but she did not sell any of the stock), and she received $30,000 of life
insurance proceeds from the death of her husband. What is the amount of
Joanna's gross income from these items?
a. $60,000
b. $65,000
c. $95,000
d. $90,000
True - CORRECT ANSWER T/F: The cash method of accounting requires taxpayers
to recognize income when they receive it in the form of cash, property, or
services.
False - CORRECT ANSWER T/F: A taxpayer who borrows money will include that
amount borrowed in their gross income under the all-inclusive definition of
income.
True - CORRECT ANSWER T/F: A taxpayer generally includes in gross income the
amount of debt forgiven by a lender.
a. all income from whatever source derived unless excluded by law. - CORRECT
ANSWER Gross income includes:
, a. all income from whatever source derived unless excluded by law.
b. Excluded income
c. Deferred income
d. All realized income
c. Hillary is taxed on the $5,000 of service income in the year she receives the
check. - CORRECT ANSWER Hillary is a cash-basis calendar-year taxpayer. During
the last week of December, she received a letter containing a $5,000 check for
services rendered. Which of the following is a true statement?
a. Hillary is taxed on the $5,000 of service income in the year she cashes the check
b. Hillary is taxed on the $5,000 of service income in the year the check was
mailed.
c. Hillary is taxed on the $5,000 of service income in the year she receives the
check.
d. Hillary is taxed on the $5,000 of service income in the year she provides the
services.
d. $8,500 - CORRECT ANSWER Shaun is a student who has received an academic
scholarship to State University. The scholarship paid $14,000 for tuition, $2,500
for fees, and $1,000 for books. In addition, Shaun's dormitory fees of $8,500 were
paid by the university when he agreed to counsel freshman on campus living.
What amount must Shaun include in his gross income?
a. $9,500
b. $11,000
c. $2,500
d. $8,500
Verified Answers
Flat tax (income or excise) - CORRECT ANSWER Define Proportional Tax Rate
increasing marginal tax rate as the tax base increases (US Federal Income Tax) -
CORRECT ANSWER Define Progressive Tax Rate
decreasing marginal tax rate as the tax base increases (Social Security) - CORRECT
ANSWER Define Regressive Tax Rate
a. C Corporation - CORRECT ANSWER Which of the following is taxed at the entity
level?
a. C corporation
b. S corporation
c. General partnership
d. LLC
c. Treasury Regulations - CORRECT ANSWER What has the second highest
administrative authority?
a. Internal Revenue Code
b. Tax Treaties
c. Treasury Regulations
,d. CCH
a. Single - CORRECT ANSWER Matt has a taxable income of $19,000. He has no
children What is his best tax filing status?
a. Single
b. Head of Household
c. Married Filing Joint
d. Qualified Widow
Primary are official sources of tax law while secondary are unofficial tax
authorities - CORRECT ANSWER What is the difference between primary and
secondary law sources?
Sufficiency, Equity, Certainty, Convenience, Economy - CORRECT ANSWER What
criteria is used to evaluate how good a tax system is?
True - CORRECT ANSWER T/F: Virtually every transaction involves the taxpayer and
two other parties that have an interest in the tax ramifications of the transaction.
d. A cash-basis business delaying billing its customer until after year-end -
CORRECT ANSWER Which of the following is an example of the timing strategy?
a. A corporation paying its shareholders a $20,000 dividend
b. A parent employing her child in the family business
c. A taxpayer gifting stock to his children
d. A cash-basis business delaying billing its customer until after year-end
,True - CORRECT ANSWER T/F: For purposes of determining filing status, a
taxpayer's marital status is determined on the last day of the tax year in question.
a. $60,000 - CORRECT ANSWER Joanna received $60,000 compensation from her
employer, the value of her stock in ABC company appreciated by $5,000 during
the year (but she did not sell any of the stock), and she received $30,000 of life
insurance proceeds from the death of her husband. What is the amount of
Joanna's gross income from these items?
a. $60,000
b. $65,000
c. $95,000
d. $90,000
True - CORRECT ANSWER T/F: The cash method of accounting requires taxpayers
to recognize income when they receive it in the form of cash, property, or
services.
False - CORRECT ANSWER T/F: A taxpayer who borrows money will include that
amount borrowed in their gross income under the all-inclusive definition of
income.
True - CORRECT ANSWER T/F: A taxpayer generally includes in gross income the
amount of debt forgiven by a lender.
a. all income from whatever source derived unless excluded by law. - CORRECT
ANSWER Gross income includes:
, a. all income from whatever source derived unless excluded by law.
b. Excluded income
c. Deferred income
d. All realized income
c. Hillary is taxed on the $5,000 of service income in the year she receives the
check. - CORRECT ANSWER Hillary is a cash-basis calendar-year taxpayer. During
the last week of December, she received a letter containing a $5,000 check for
services rendered. Which of the following is a true statement?
a. Hillary is taxed on the $5,000 of service income in the year she cashes the check
b. Hillary is taxed on the $5,000 of service income in the year the check was
mailed.
c. Hillary is taxed on the $5,000 of service income in the year she receives the
check.
d. Hillary is taxed on the $5,000 of service income in the year she provides the
services.
d. $8,500 - CORRECT ANSWER Shaun is a student who has received an academic
scholarship to State University. The scholarship paid $14,000 for tuition, $2,500
for fees, and $1,000 for books. In addition, Shaun's dormitory fees of $8,500 were
paid by the university when he agreed to counsel freshman on campus living.
What amount must Shaun include in his gross income?
a. $9,500
b. $11,000
c. $2,500
d. $8,500
