The revenue agent who audited Ms. Hsui's Form 1040 discovered a $15,500 deduction that wasn't allowed by the tax law. The improper deduction reduced Ms. Hsui's tax by $5,053. The total tax deficiency for the year under audit was $6,510. Required: a. Compute the maximum penalty if the agent concludes that the improper deduction was due to Ms. Hsui's negligence in preparing the tax return. b. Compute the maximum penalty if the agent concludes that the improper deduction represented Ms. Hsul's deliberate attempt to cheat the government by underpaying tax. Complete this question by entering your answers in the tabs below. Required A Required B Compute the maximum penalty if the agent concludes that the improper deduction was due to Ms. Hsui's negligence in preparing the tax return. Note: Round your answer to the nearest whole dollar amount. Negligence penalty s 291 Required A Required B >

The revenue agent who audited Ms. Hsui's Form 1040 discovered a $15,500 deduction that wasn't allowed by the tax law. The improper deduction reduced Ms. Hsui's tax by $5,053. The total tax deficiency for the year under audit was $6,510. Required: a. Compute the maximum penalty if the agent concludes that the improper deduction was due to Ms. Hsui's negligence in preparing the tax return. b. Compute the maximum penalty if the agent concludes that the improper deduction represented Ms. Hsul's deliberate attempt to cheat the government by underpaying tax. Complete this question by entering your answers in the tabs below. Required A Required B Compute the maximum penalty if the agent concludes that the improper deduction was due to Ms. Hsui's negligence in preparing the tax return. Note: Round your answer to the nearest whole dollar amount. Negligence penalty s 291 Required A Required B >

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Drag and drop the best response into the blank box. Shelley Bowman, CPA, obtained her designation in 2000. Since that time, she has built up a significant tax practice. In late 2021, a new client approached Shelley and asked her to perform an audit engagement. Believing this could lead to a substantial amount of tax work in the future, Shelley agreed, even though she had never completed an audit, nor taken any assurance courses since 1980. Violation of Competence No violation of the Rules of Professional Conduct Violation of Independence - self-interest Violation of the Charter of Conduct Violation of Independence - familiarity Violation of Independence - self review
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Sarah Keene, CPA, is the newly hired controller for Plexicon, Inc., which is a publicly traded corporation. Ms. Keene's first job with Plexicon was the review of the company's accounting practices on deferred income taxes. In doing her review, she noted differences between tax and book depreciation methods that permitted Plexicon to realize a sizable deferred tax liability on its balance sheet. As a result, Plexicon paid very little in income taxes at that time.\\n\\n Keene also discovered that Plexicon has an explicit policy of selling off plant assets before they reversed in the deferred tax liability account. This policy, coupled with the rapid expansion of its plant asset base, allowed Plexicon to "defer" all income taxes payable for several years, even though it always has reported positive earnings and an increasing EPS. Keene checked with the legal department and found the policy to be legal, but she's uncomfortable with the ethics of it.\\n\\nRequired:\\n\\nWhy would Plexicon…
Mr. Stanhope has an MBA degree from Stanford University and has successfully operated a business for 18 years. The revenue agent who audited Mr. Stanhope's Form 1040 discovered a glaring error resulting in a $17,500 underpayment of tax. When questioned by the revenue agent about the error, Mr. Stanhope just shrugged and offered no logical explanation. Required: a. If the error resulted from Mr. Stanhope's blatant disregard of a tax rule, compute the penalty for negligence. b. Is Mr. Stanhope's level of education and business experience likely to be a factor considered by the revenue agent in determining negligence? Complete this question by entering your answers in the tabs below. Required A Required B If the error resulted from Mr. Stanhope's blatant disregard of a tax rule, compute the penalty for negligence. Accuracy-related penalty
Sally and Tom were married and properly filed a joint return for the year 20x4 on March 30, 20 x5. The return reported $200,000 of gross income and a tax liability of $40,000. A total of $ 37,500 in taxes had been withheld from their salaries during the year. The IRS mailed a Notice of Deficiency to Sally and Tom on April 15, 20x8. What would be the last date on which the IRS could assess tax if- (a) Sally and Tom did not file a petition in the Tax Court? (b) The Tax Court issued its opinion on April 1, 20x9 and entered its decision on June 30, 20x9? (c) Would your answer to (b) be different if the Notice of Deficiency had been mailed on April 10, 20x8 ?
Your new client, Ms. X, had her 2018 tax return audited last year and found the whole experience so painful that she never wants to take a chance on ever having to deal with the IRS again. (She should have hired you to help defend the audit, but didn’t.) Specifically, she lost a very big part of her research tax credit because the IRS reclassified a large category of expenses that she had included in calculating the credit as “not sufficiently research-related.” As to her 2019 return, you note that Ms. X has even more expenses in that same category, meaning that her tax credit would be much larger if they were included in the calculation. And, more importantly, you’re aware that a Tax Court decision from earlier this year held, in another taxpayer’s almost identical circumstances, that the very same category of expenses was properly included in the research credit calculation. Can you, or should you, advise Ms. X that her own expenses in this same category can be used to her benefit in…
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Calvin Corporation's office was burglarized. The thieves stole 10 laptop computers and other electronic equipment. The lost assets had an original cost of $35,000 and accumulated tax depreciation of $19,400. Calvin received an insurance reimbursement of $20,000 related to the theft loss and immediately purchased new replacement computer equipment. In each of the following cases: a. Determine Calvin's recognized gain, if any, and the tax basis of the replacement property. Assume that Calvin would elect to defer gain recognition when possible. The replacement property cost $27,000. b. Determine Calvin's recognized gain, if any, and the tax basis of the replacement property. Assume that Calvin would elect to defer gain recognition when possible. The replacement property cost $18,000.
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