The IRS determined that John underpaid his 2016 tax liability by $6,000 due to negligence. In...
The IRS determined that John underpaid his 2016 tax liability by $6,000 due to negligence. In 2018, John pays $1,000 of interest related to the underpayment and the full amount of any penalties assessed by the IRS.
|
a. |
Calculate the amount of the accuracy-related penalty that could be assessed by the IRS in this situation. |
|
b. |
What part of the deficiency, income taxes, interest, and penalty, is deductible by John on his current tax return? Explain. |
Homework Answers
Hello,
a) The amount of negligence penalty of John would be 20% of the amount he underpaid, ie, 20% of $6,000 which is equal to $1,200.
b) In his current tax return, John can deduct the income taxes he paid but the penalty and interest cannot be deducted.
Thanks.
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