A revenue agent determined that Ms. Osaka underpaid income tax by $48,100 and concluded that $9,200 was caused by inadequate record keeping while the remainder was caused by an understandable misapplication of a complex rule of law. Required: Compute the negligence penalty that the revenue agent can impose on Ms. Osaka. Accuracy-related penalty

A revenue agent determined that Ms. Osaka underpaid income tax by $48,100 and concluded that $9,200 was caused by inadequate record keeping while the remainder was caused by an understandable misapplication of a complex rule of law. Required: Compute the negligence penalty that the revenue agent can impose on Ms. Osaka. Accuracy-related penalty

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter12: Tax Administration And Tax Planning

Section: Chapter Questions

Problem 5P

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Jack made a mathematical mistake in computing her tax liability. Which audit program will likely catch Jack's mistake? A. DIF system B. Mathematical correction C. Document perfection D. Information matching E. None of these
Taxpayers face the risk of the 20% accuracy-related penalty when they take return positions that are too aggressive or otherwise problematic... (a) Section 6662 itself contains no escape mechanisms whatsoever, so a tax-payer’s only available defense against the penalty is “good faith and reasonable cause” per § 6664(c). (b) Section 6662 contains two stated triggers, “negligence” and “substantial understatement,” and the IRS cannot assert the penalty unless both are present. (c) Unless a taxpayer ultimately wins with respect to the underlying tax issue(s) (the asserted tax deficiency), it is impossible to win on the penalty issue. (d) If a taxpayer does win with respect to the underlying tax issue(s), the penalty assertion becomes moot.
Klawz received a 1099-DIV from Nike Corporation for $1,000 and a 1099-INT from his Bank of $500. If Klawz's neglects to enter the 1099-DIV on his US Income Tax Return (Form 1040), which audit program likely adjusted Klawz's tax return? Document perfection. None of the choices are correct. Deduction Detective. Information matching. DIF system.
According to the AICPA's Statements on Standards for Tax Services, what duties does the tax practitioner owe the client? (If an input field is not used leave the input field(s) empty.) not to disclose tax-related errors without the client's consent. to inform the client of corrective measures to be taken. C to inform the client of errors in a previously filed tax return. to inform the client of how the client can avoid a penalty through disclosure. to inform the client of the potential adverse consequences of a tax return position. to inquire of the client when information provided by him or her appears incorrect, incomplete, or inconsistent on its face. to inquire of the client when the client must satisfy conditions to take a deduction. to instruct the client to file an extension based on refunds that are expected. to instruct the client whether or not to file a tax return.
Which of the following statements about the Commissioner’s powers is most correct? a. The Commissioner cannot request a taxpayer to provide information in writing. b. The Commissioner can remove documents from a taxpayer’s premises. c. The Commissioner is entitled to access a taxpayer’s premises at any reasonable time without notice. d. The Commissioner needs to obtain a search warrant in order to enter a taxpayer’s premises.
For each of the following situations, indicate the amount of the penalty that could be imposed on the tax return preparer: a. A tax return preparer understates the taxpayer's tax liability with a frivolous position and does not disclose the position. The greater of $ percent of the income derived by the tax preparer for an undisclosed unrealistic position. or b. A tax return preparer fails to furnish his identifying number. c. A tax return preparer aids a taxpayer (an individual) in understating a tax liability. d. A tax return preparer endorses and cashes a client's tax refund check.
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alculator Which of the following is not a preparer penalty? a.Tax preparers may be assessed a penalty for endorsing or cashing a refund check issued to a taxpayer. b.Tax preparers may be assessed a penalty for failing to give the taxpayer the preparer's workpapers. c.Tax preparers may be assessed a penalty for failing to keep a copy of the prepared return. d.Tax preparers may be assessed a penalty for failing to sign a tax return.
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