Question

Problem 17-26 (a) (LO. 6) Melinda, a cash basis, calendar year taxpayer, filed a 90-day extension for her Federal income tax return without any tax payment. She paid the taxes that were due when she filed the return 65 days after the due date. a. What penalty or penalties will Melinda incur? Melinda is liable for only the failure to pay penalty b. How much will she have to pay if her additional tax is $75,000? Disregard any interest she must pay. Assume 30 days in a month. If Melinda is liable for any penalties, then the total penalty amount would be X.

Answer 1

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Melinda
The failure to pay penalty is one-half of one percent for each month, or part of a month, up to a maximum of 25% of the amount of tax that remains unpaid from the due date of the return until the tax is paid in full.
Tax amount	75,000.00		A
Penalty rate	1.50%		B
Penalty per month	1,125.00		C=A*B
Days late paid	65.00		D
No. of days for 1 month	30.00		E
No. of months	3.00	It is rounded off to next full number.	F=D/E
Failure to pay penalty	$ 3,375.00		G=F*C