Ms. Perez is a professional tax return preparer. Three years ago, Ms. Perez prepared Form 1120 for Denver, Inc. The tax preparation fee was $14,850. Upon audit of the return, the IRS disallowed a $112,000 deduction, which increased the corporation's tax liability by $39,200. Required: a. Compute Ms. Perez's preparer penalty if the IRS concludes that Ms. Perez had no reasonable legal basis for claiming the deduction and was not acting in good faith by doing so. b. Compute Ms. Perez's preparer penalty if the IRS concludes that Ms. Perez intentionally disregarded the tax law by claiming the deduction in a willful attempt to understate Denver's tax. c. Compute Ms. Perez's preparer penalty to Parts (a) and (b), if Ms. Perez's preparation fee was only $3,500?

Ms. Perez is a professional tax return preparer. Three years ago, Ms. Perez prepared Form 1120 for Denver, Inc. The tax preparation fee was $14,850. Upon audit of the return, the IRS disallowed a $112,000 deduction, which increased the corporation's tax liability by $39,200. Required: a. Compute Ms. Perez's preparer penalty if the IRS concludes that Ms. Perez had no reasonable legal basis for claiming the deduction and was not acting in good faith by doing so. b. Compute Ms. Perez's preparer penalty if the IRS concludes that Ms. Perez intentionally disregarded the tax law by claiming the deduction in a willful attempt to understate Denver's tax. c. Compute Ms. Perez's preparer penalty to Parts (a) and (b), if Ms. Perez's preparation fee was only $3,500?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter1: Federal Income Taxation—an Overview

Section: Chapter Questions

Problem 41P

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