Mr Braco Is an Enrolled Agent Who Prepares Tax Returns

question 68

Multiple Choice

Mr. Braco is an enrolled agent who prepares tax returns for a living. In preparing Mr. and Mrs. Colter's Form 1040, Mr. Braco claimed a deduction based on an unreasonable legal position. Mr. Braco's compensation for the return was $3,800. What is the consequence to Mr. Braco if the IRS disallows the deduction?

• A) The IRS can terminate Mr. Braco's status as an enrolled agent.
• B) The IRS can impose a $1,900 penalty on Mr. Braco.
• C) The IRS can impose a negligence penalty on the Colters but can't penalize Mr. Braco.
• D) The IRS can impose a civil fraud penalty on Mr. Braco.

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Definitions:

Senate Hearings

Proceedings conducted by the United States Senate or its committees to gather information, investigate issues, or vet nominees for public office.

Puppet Governments

Governments that are ostensibly in control of a country but in reality are under the influence or control of an external power, often used to execute the controlling power's interests.

Four Freedoms

A concept developed by President Franklin D. Roosevelt in 1941, representing the rights he believed everyone in the world should possess: freedom of speech, freedom of worship, freedom from want, and freedom from fear.