Megan Prepared a Federal Income Tax Return for Joan for Compensation

question 147

Multiple Choice

Megan prepared a Federal income tax return for Joan for compensation. Joan's return included an aggressive interpretation of the rules concerning overnight business travel. Megan is not liable for a preparer penalty for taking an unreasonable tax return position if:

• A) The tax reduction attributable to the disputed deduction did not exceed $5,000.
• B) There was a reasonable basis for Joan's interpretation of the travel deduction rules.
• C) There was substantial authority for Joan's interpretation of the travel deduction rules.
• D) The IRS found that the travel deduction was frivolous, but Joan had disclosed the position in an attachment to the return.

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Definitions:

Dispatching

The process of sending goods or vehicles out to specific locations or assignments.

Intermediate Future

A time frame that is neither immediately short-term nor long-term, typically considered to span from one to five years ahead.

Demand-Influencing

Strategies or actions undertaken to affect the level of demand for a product or service, often aiming to increase it.

Excess Capacity

The situation in which a firm's production capabilities exceed the demand for its products or services.