Chapter 9 - Chapter 9 Penalties and Interest 1Answer: (A)...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 9 Penalties and Interest 1Answer: (A) The delinquency penalty is generally assessed by the Service Center at the time the return is processed. (B) If the correct tax is shown on the original return, even if the return is delinquent, the substantial understatement penalty is not applicable. See Code Sec. 6664(a). 2. Answer: Because Paula did not specifically inquire as to the adequacy of the client’s records to satisfy the Code Sec. 274 substantiation requirement, the penalty under Code Sec. 6694(a) could be imposed. Even though Paula had told the client about keeping adequate records at the inception of the corporation, she failed to ask about them at the time the return was actually prepared. See Notice 90-20, 1990-1 CB 328, 331; Reg. § 6694-1(e). Negligent behavior that would have been subject to the penalty under former Code Sec. 6694(e) will continue to be subject to the penalty as amended under current Code Sec. 6694(a). 3. Answer: In the first situation, where the IRA deduction eliminates the understatement, the penalty will be abated. See Code Sec. 6694(d). In the second situation, the penalty will not be abated even
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/08/2011 for the course ECON 3301 taught by Professor Clavin during the Spring '10 term at Hartford.

Page1 / 3

Chapter 9 - Chapter 9 Penalties and Interest 1Answer: (A)...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online