On his 2019 income tax return, Andrew omitted income and overstated deductions to the extent that...
- On his 2019 income tax return, Andrew omitted income and overstated deductions to the extent that his income tax was understated by $500,000. Disregarding any interest element, what is Andrew’s penalty if the understatement was due to:
a. Negligence.
b. Civil fraud.
c. Criminal fraud.
Homework Answers
c. Criminal Fraud.
Tax evasion is criminal and would lead to a criminal liability. The omission of income and over statement of deductions is one of the examples of tax evasion. In case the charges are proved and the penalty is due it would amount to criminal fraud.
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