WGU C239 Exam Problems 110 Questions with
Correct Answers 21 Pages
Angel has an AGI of $85,000 without considering the sale of a no
depreciable asset for $35,000. The asset was acquired five years ago
and has an adjusted basis of $50,000. She has no other sales or
exchanges.
Determine Angel's AGI for the following independent situations when the
asset is:
A capital asset § 1231 asset - ✔️
✔8
️ 2,000 - 70,000
A owns invest land with adjusted bases of 50000 FMV of 70000 subject
to a mortgage of 15000. B owns investment land with an adjusted basis
of 60000 FMV of 65000 subject to a mortgage of 10000, A and B
exchange real estate investments what are there gain and basis -
✔️
✔️A
Gain-20000
Recognized-5000
Basis-50000
P a g e 1 | 37
,B
Gain -5000
Recognized -0
Basis -65000
What is the default tax classification for a LLC? - ✔️
✔P
️artnership,
Form 1065
MacDonald Consulting, LLC is expected to earn $300,000 in annual
profits. The LLC is owned equally by four people who have other
substantial income and will not need their profits for many years.
What is the appropriate tax-minimizing entity classification decision for
this business? - ✔️
✔C
️Corporation
What is optimal tax planning? - ✔️
✔️Maximizing after-tax cash flows
A Personal Service Corporation (PSC) reports taxable income of
$300,000.
A Personal Service Corporation is taxed at 35%.
What is the PSC's regular tax liability? - ✔️
✔️$105,000
P a g e 2 | 37
,Beginning in 2013, higher-income taxpayers' itemized deductions are
reduced.
What is the maximum percentage higher-income taxpayers' itemized
deductions are reduced - ✔️
✔8
️ 0%
Art, a sole proprietor operates Cherry Farms.
Which schedule should he use to individually report the profit or loss
from farming? - ✔️
✔️Form 1040 Schedule F, Profit or Loss from
Farming
An individual received retirement benefits of $15,000, of which $12,000
was deposited into a savings account. The remaining $3,000 was spent
on food, clothing, medical and dental care.
How much support must the individual receive from his child for him to
be classified as a dependent on his child's taxes? - ✔️
✔️More than $
3,000
P a g e 3 | 37
, An individual owns 60% of a CPA firm. The partnership sustained total
operating losses of $80,000 in the current tax year, and the basis in the
partnership is adequate to sustain the loss.
What is the amount of the individual's recognized loss for the current tax
year? - ✔️
✔️($48,000)
An individual is considering alternative organizational forms for his
business. The business net earnings are $200,000.
The owner is single and has $10,000 of income from other sources and
personal itemized deductions of $16,000. Compensation for services is
$85,000. Business charitable contributions are $5,000. Owner's
dividends are $20,000.
What will be the owner's taxable income if the business is operated as
an C Corporation? - ✔️
✔️95,050.
An individual is considering alternative organizational forms for his
business. The business net earnings are $200,000.
The owner is single and has $10,000 of income from other sources and
personal itemized deductions of $16,000. Compensation for services is
P a g e 4 | 37
Correct Answers 21 Pages
Angel has an AGI of $85,000 without considering the sale of a no
depreciable asset for $35,000. The asset was acquired five years ago
and has an adjusted basis of $50,000. She has no other sales or
exchanges.
Determine Angel's AGI for the following independent situations when the
asset is:
A capital asset § 1231 asset - ✔️
✔8
️ 2,000 - 70,000
A owns invest land with adjusted bases of 50000 FMV of 70000 subject
to a mortgage of 15000. B owns investment land with an adjusted basis
of 60000 FMV of 65000 subject to a mortgage of 10000, A and B
exchange real estate investments what are there gain and basis -
✔️
✔️A
Gain-20000
Recognized-5000
Basis-50000
P a g e 1 | 37
,B
Gain -5000
Recognized -0
Basis -65000
What is the default tax classification for a LLC? - ✔️
✔P
️artnership,
Form 1065
MacDonald Consulting, LLC is expected to earn $300,000 in annual
profits. The LLC is owned equally by four people who have other
substantial income and will not need their profits for many years.
What is the appropriate tax-minimizing entity classification decision for
this business? - ✔️
✔C
️Corporation
What is optimal tax planning? - ✔️
✔️Maximizing after-tax cash flows
A Personal Service Corporation (PSC) reports taxable income of
$300,000.
A Personal Service Corporation is taxed at 35%.
What is the PSC's regular tax liability? - ✔️
✔️$105,000
P a g e 2 | 37
,Beginning in 2013, higher-income taxpayers' itemized deductions are
reduced.
What is the maximum percentage higher-income taxpayers' itemized
deductions are reduced - ✔️
✔8
️ 0%
Art, a sole proprietor operates Cherry Farms.
Which schedule should he use to individually report the profit or loss
from farming? - ✔️
✔️Form 1040 Schedule F, Profit or Loss from
Farming
An individual received retirement benefits of $15,000, of which $12,000
was deposited into a savings account. The remaining $3,000 was spent
on food, clothing, medical and dental care.
How much support must the individual receive from his child for him to
be classified as a dependent on his child's taxes? - ✔️
✔️More than $
3,000
P a g e 3 | 37
, An individual owns 60% of a CPA firm. The partnership sustained total
operating losses of $80,000 in the current tax year, and the basis in the
partnership is adequate to sustain the loss.
What is the amount of the individual's recognized loss for the current tax
year? - ✔️
✔️($48,000)
An individual is considering alternative organizational forms for his
business. The business net earnings are $200,000.
The owner is single and has $10,000 of income from other sources and
personal itemized deductions of $16,000. Compensation for services is
$85,000. Business charitable contributions are $5,000. Owner's
dividends are $20,000.
What will be the owner's taxable income if the business is operated as
an C Corporation? - ✔️
✔️95,050.
An individual is considering alternative organizational forms for his
business. The business net earnings are $200,000.
The owner is single and has $10,000 of income from other sources and
personal itemized deductions of $16,000. Compensation for services is
P a g e 4 | 37
