LO.6 Baez, a cash basis, calendar year taxpayer, filed his Federal income tax return 48 days after the duedate. Baez never extended his return, and he paid the taxes that were due when he filed the return. Whatpenalty will Baez incur, and how much will he have to pay if his additional tax is $10,000? Disregard anyinterest he must pay.

I will calculate the penalty for failure to file and the penalty for failure to pay. Then, I will…

Answered: LO.6 Baez, a cash basis, calendar year…

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter17: Tax Practice And Ethics

Section: Chapter Questions

Problem 26P

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LO.5 During 2019, Greg Cruz (1401 Orangedale Road, Troy, MI 48084) works for Maple Corporation and Gray Company. He earns 90,000 at Maple Corporation, where he is a full-time employee. Greg also works part-time for Gray Company for wages of 50,000. a. Did Greg experience an overwithholing of FICA taxes? Write a letter to Greg and a memo for the tax files in which you explain your conclusion. b. Did Maple Corporation and Gray Company overpay the employers portion of FICA? Explain.
Charles E. Bennett, age 64, will retire next year and is trying to decide whether to begin collecting his Social Security benefits at that time. His monthly benefits will increase if he defers his starting date for the benefits. He has asked you to estimate how much his income tax will increase as a result of collecting Social Security. Charles and his wife Bernice B., file a joint return, have no other dependents, and claim the standard deduction. Their only income other than the Social Security benefits are: The Social Security benefits for the year would be 12,000. a. Complete Worksheet 1, Figuring Your Taxable Benefits, included in IRS Publication 915 to determine the taxable portion of this couples taxable Social Security benefits (the publication includes a blank worksheet). b. What is the taxable portion of the 12,000 in Social Security benefits?
Lisa records nonrefundable Federal income tax credits of 65,000 for the year. Her regular income tax liability before credits is 190,000, and her TMT is 150,000. a. What is Lisas AMT? b. What is Lisas regular income tax liability after credits?
LO.5 Last year Alans accountant informed him that he could not claim any of his passive activity losses on his income tax return because of his lack of material participation. To circumvent the tax problem this year, Alan tells his spouse that she may have to put in some time at the various businesses. Identify the tax issues that Alan faces.
Arthur Wesson, an unmarried individual who is age 68, reports taxable income of 510,000 in 2019. He records positive AMT adjustments of 80,000 and preferences of 35,000. Arthur itemizes his deductions, and his regular tax liability in 2019 is 153,694. a. What is Arthurs AMT? b. What is the total amount of Arthurs tax liability? c. Draft a letter to Arthur explaining why he must pay more than the regular income tax liability. Arthurs address is 100 Colonels Way, Conway, SC 29526.
LO.5 Gordon paid the $10,000 balance of his Federal income tax three months late. Ignore daily compounding of interest. Determine the interest rate that applies relative to this amount if the Federal short-term rate for the relevant period is 3%, assuming that: a. Gordon is an individual. b. Gordon is a calendar year C corporation. C. The $10,000 is not a tax that is due, but is a refund payable by the IRS to Gordon (an individual). d. The $10,000 is not a tax that is due, but is a refund payable by the IRS to Gordon (a calendar year C corporation).
LO.6 Wade filed his Federal income tax return on time but did not remit the balance due. Compute Wade's failure to pay penalty in each of the following cases. a. Four months late, $3,000 additional tax due. b. Ten months late, $4,000 additional tax due. c. Five years late, $5,000 additional tax due.
LO.6 Rita forgot to pay her Federal income tax on time. When she actually filed, she reported a balance due. Compute Rita's failure to file penalty in each of the following cases. a. Two months late, $1,000 additional tax due. b. Five months late, $3,000 additional tax due. c. Eight months late, $4,000 additional tax due. d. Three and a half months late, $3,000 additional tax due. e. Five months late due to fraud by Rita, $4,000 additional tax due. f. Ten months late due to fraud by Rita, $15,000 additional tax due.
LO.6 Maureen, a calendar year individual taxpayer, files her 2021 return on November 4, 2023. She did not obtain an extension for filing her return, and the return reflects additional income tax due of $15,000. a. What are Maureen's penalties for failure to file and to pay? b. Would your answer to part (a) change if Maureen, before the due date of the return, had retained a CPA to prepare and e-file the return, and it was the CPA's negligence that caused the delay? Explain.
s
Required information [The following information applies to the questions displayed below.] This year Lloyd, a single taxpayer, estimates that his tax liability will be $12,850. Last year, his total tax liability was $16,900. He estimates that his tax withholding from his employer will be $9,605. How much does Lloyd need to increase his withholding by (for the year), in order to avoid the underpayment penalty? Increase in withholding
20.A taxpayer certificate of deposit that was set to mature the end of next year is needed for a down payment on their residence the taxpayer decided to cash out the certificate of deposit now is the following scenario accurate. A. The taxpayer must report their total amount of interest and can deduct the penalty on their tax return. B. The total interest income of $1,600 and a taxpayer early withdrawal penalty is $300 the taxpayer net the two amount together and report $1300 interest on a schedule B. C. Both the total interest amount in the early withdrawal penalties are reported to the taxpayer on form 1099-INT.

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