Taxation C237 (Pre-assessment guide)

Taxation C237 (Pre-assessment guide)

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WGU - C237 - TAXATION 1

292 terms nancy_bergPreview D102 Financial Accounting WGU 52 terms Amy_WGUPreview C237 Taxation I Pre-assessment 66 terms juliagoolia0906 Preview WGU C 114 term Jess What year was the U.S. income tax on individuals permanently established?

A. 1861

B. 1894

C. 1913

D. 1924

C. 1913

What is the second-highest level of legislative authority of tax law in the United States?

• American Institute of Certified Public Accountants

(AICPA)

• Journal of Taxation
• Revenue procedures
• Internal Revenue Code
• Internal Revenue Code

In which publications does the IRS provide information on the tax consequences of specific transactions encountered in practice?

• Technical advice memoranda
• Information releases
• Revenue rulings
• Official announcements
• Revenue rulings

What is an example of equity when evaluating a tax system?

• Each taxpayer can choose the due date for their tax.
• Each taxpayer pays a different amount based on their

income level.

• Individuals have designated amounts withheld from

each paycheck.

• Individuals may take a standard deduction to reduce

record keeping.

• Each taxpayer pays a different amount based on their income level.

What is true about horizontal equity?

• Taxpayers with a greater ability to pay tax paying more

tax

• Two taxpayers in similar situations paying the same tax
• Taxpayers with a lesser ability to pay tax paying more

tax

• Horizontal equity does not exist in a federal tax

structure.

• Two taxpayers in similar situations paying the same tax

What is the nature of a progressive tax rate structure?

• Each taxpayer devotes the same percentage of

income to pay the tax.

• Lower-income taxpayers devote a greater percentage

of income to pay the tax relative to higher-income individuals.

• The rate of tax increases as the tax base increases.
• The rate of tax decreases as the tax base increases.
• The rate of tax increases as the tax base increases.

Which tax rate structure is exemplified by the FICA portion of Social Security taxes?

• Effective
• Regressive
• Progressive
• Proportional
• Regressive

An individual is salaried, is not operating a business, is divorced with one child living at home, earned $93,000 in wages for 2021, and has $17,900 of itemized deductions.What is this individual's tax liability?

A. $6,682

B. $10,620

C. $10,818

D. $14,889

D. $14,889

Which tax is based on the value of an individual's real estate?

• Property tax
• Franchise tax
• Federal estate tax
• Wealth transfer tax
• Property tax

Which entities are considered flow-through entities in the U.S. tax system?

• Individual taxpayers
• Religious associations
• Regular C corporations
• Limited liability partnerships
• 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?

• 3 years
• 4 years
• 5 years
• 6 years
• 6 years

Which component of a tax practice focuses on minimizing taxes paid and maximizing after-tax cash flows while accommodating clients' other desires?

• Tax planning
• Tax research
• Tax procedure
• Tax compliance
• Tax planning

Which tax term defines a personal expenditure, such as charitable contributions and medical expenses, which taxpayers may claim if they keep records?

• Itemized deductions
• Standard deductions
• Personal exemptions
• Dependency exemptions
• 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 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 bank loan of $2,000
• A payment of $2,000 for stocks sold
• An offer to buy a boat for $2,000
• An increase in stock value of $2,000
• A payment of $2,000 for stocks sold

Which type of income satisfies all three requirements for the income to be taxable?

• Receiving a $5,000 gift
• Renting out a condo for $5,000
• Inheriting $5,000 in gold coins
• Obtaining a $5,000 loan from the bank
• Renting out a condo for $5,000