During the audit of Mr. and Mrs. Greenwood’s income tax return, the revenue agen

Question

During the audit of Mr. and Mrs. Greenwood’s income tax return, the revenue agent concluded that the couple had claimed a $26,300 deduction that was not allowed by law. The improper deduction reduced the couple's tax by $9,205. The Greenwood’s total tax deficiency was $13,890. Compute the penalty that the IRS agent can impose if the agent concludes that the improper deduction was attributable to negligence. Compute the penalty that the IRS agent can impose if the agent concludes that the improper deduction was attributable to fraud.

Explanation / Answer

If the deduction is due to negligence Amt Of deduction due to negligence                  9,205.00 Penalty for negligence@20%= $              1,841.00 If the dedcution is cocluded as fraud Amt Of deduction due to fraud                  9,205.00 Penalty for negligence@75%= $              6,903.75 Pls note the penalty related to the tax deficiency of $ 9205 is calculated here The remaining part of Total Tax deficiency of $ 13890=$4685 will be subject to penalty as per the conclusion regarding the type of deficiecny to calculate the applicable penalty amount.

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.