WGU C237 Taxation 1 Exam 166 Questions with
Verified Answers
Gross Income (-Deductions)
AGI (-Standardized/Itemized Deduction, Deduction for QBI, and Charitable
Contributions)
Taxable Income (*Tax Rate)
Income Tax Liability (+Other Taxes)
Total Tax (-Credits/Prepayments)
= Taxes Due/Refund - CORRECT ANSWER individual income tax formula
Gross Income includes all realized Income from whatever source derived unless
government tells you to exclude it. - CORRECT ANSWER All-inclusive Income
Concept
Ordinary and Capital - CORRECT ANSWER 2 Categories of Income
Inventory/Supplies, depreciable property, real property used in trade or business -
CORRECT ANSWER Ordinary Assets
all assets OTHER THAN Inventory/Supplies, depreciable property, and real
property used in trade or business - CORRECT ANSWER Capital Assets
Defines capital assets in the negative - CORRECT ANSWER Section 1221
,Investment-type assets and personal use assets - CORRECT ANSWER Capital Assets
are...
Inventory, Supplies, and Real Property - CORRECT ANSWER Give 3 Examples of
Ordinary Assets
Stock Investments, personal residence, and personal automobile - CORRECT
ANSWER Give 3 Examples of Capital Assets
Capital asset held 366+ days - CORRECT ANSWER Long-term Asset
Capital asset held a year or less - CORRECT ANSWER Short-term asset
Capital Gains and Losses - CORRECT ANSWER Sales of capital assets generate...
calculate the net to determine overall gain or loss - CORRECT ANSWER What if a
taxpayer sells multiple capital assets that result in both gains and losses?
$3,000, total if married or single (does NOT increase on joint return) - CORRECT
ANSWER How much of a capital loss can you take against your ordinary income?
Gain or loss of asset value on paper - CORRECT ANSWER Unrealized
Asset has been sold and money is in hand - CORRECT ANSWER Realized
, Required to list gain as income OR allowed to take a loss as deduction on your
income taxes - CORRECT ANSWER Recognized
Reduce taxable income - CORRECT ANSWER Deductions
Business deductions and some allowable personal deductions taken from Gross
Income before you get AGI (Student loan interest, IRA Contributions) - CORRECT
ANSWER FOR AGI
Deductions taken after you get AGI, these are personal. Standard or Itemized. -
CORRECT ANSWER FROM AGI
medical, charity, mortgage interest, property taxes, and income or sales tax
(depends on state) - CORRECT ANSWER Itemized Deductions
Gifts, Inheritances, and Interest from Municipal Bonds - CORRECT ANSWER What
does NOT count as income?
ordinary rates - CORRECT ANSWER How are Net short term capital gains taxed?
Maximum preferential rate, 0%, 15%, or 20%, depending on filing status and
income - CORRECT ANSWER How are Net long-term capital gains taxed?
Maximum rate of 25% (unrecaptured 1250 Gain) - CORRECT ANSWER How is long-
term depreciable real estate taxed?
Verified Answers
Gross Income (-Deductions)
AGI (-Standardized/Itemized Deduction, Deduction for QBI, and Charitable
Contributions)
Taxable Income (*Tax Rate)
Income Tax Liability (+Other Taxes)
Total Tax (-Credits/Prepayments)
= Taxes Due/Refund - CORRECT ANSWER individual income tax formula
Gross Income includes all realized Income from whatever source derived unless
government tells you to exclude it. - CORRECT ANSWER All-inclusive Income
Concept
Ordinary and Capital - CORRECT ANSWER 2 Categories of Income
Inventory/Supplies, depreciable property, real property used in trade or business -
CORRECT ANSWER Ordinary Assets
all assets OTHER THAN Inventory/Supplies, depreciable property, and real
property used in trade or business - CORRECT ANSWER Capital Assets
Defines capital assets in the negative - CORRECT ANSWER Section 1221
,Investment-type assets and personal use assets - CORRECT ANSWER Capital Assets
are...
Inventory, Supplies, and Real Property - CORRECT ANSWER Give 3 Examples of
Ordinary Assets
Stock Investments, personal residence, and personal automobile - CORRECT
ANSWER Give 3 Examples of Capital Assets
Capital asset held 366+ days - CORRECT ANSWER Long-term Asset
Capital asset held a year or less - CORRECT ANSWER Short-term asset
Capital Gains and Losses - CORRECT ANSWER Sales of capital assets generate...
calculate the net to determine overall gain or loss - CORRECT ANSWER What if a
taxpayer sells multiple capital assets that result in both gains and losses?
$3,000, total if married or single (does NOT increase on joint return) - CORRECT
ANSWER How much of a capital loss can you take against your ordinary income?
Gain or loss of asset value on paper - CORRECT ANSWER Unrealized
Asset has been sold and money is in hand - CORRECT ANSWER Realized
, Required to list gain as income OR allowed to take a loss as deduction on your
income taxes - CORRECT ANSWER Recognized
Reduce taxable income - CORRECT ANSWER Deductions
Business deductions and some allowable personal deductions taken from Gross
Income before you get AGI (Student loan interest, IRA Contributions) - CORRECT
ANSWER FOR AGI
Deductions taken after you get AGI, these are personal. Standard or Itemized. -
CORRECT ANSWER FROM AGI
medical, charity, mortgage interest, property taxes, and income or sales tax
(depends on state) - CORRECT ANSWER Itemized Deductions
Gifts, Inheritances, and Interest from Municipal Bonds - CORRECT ANSWER What
does NOT count as income?
ordinary rates - CORRECT ANSWER How are Net short term capital gains taxed?
Maximum preferential rate, 0%, 15%, or 20%, depending on filing status and
income - CORRECT ANSWER How are Net long-term capital gains taxed?
Maximum rate of 25% (unrecaptured 1250 Gain) - CORRECT ANSWER How is long-
term depreciable real estate taxed?
