Which of the Following Statements About Taxpayer Negligence Is False

question 62

Multiple Choice

Which of the following statements about taxpayer negligence is false?

• A) A taxpayer who makes a good faith effort to comply with the tax law is not negligent.
• B) A taxpayer who keeps complete and careful tax records is less likely to incur a negligence penalty than a taxpayer with no records.
• C) A taxpayer who cooperates with the revenue agent is less likely to incur a negligence penalty than an uncooperative taxpayer.
• D) A taxpayer who relies on the advice of a tax professional has a guaranteed defense against the negligence penalty.

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Definitions:

Rate of Return

The Rate of Return (RoR) is a financial metric used to measure the profitability of an investment, representing the percentage of profit or loss relative to the investment's original cost.

Variable Direct Materials Cost

Refers to the fluctuating cost of raw materials that directly goes into producing a product, changing as the volume of production varies.

Contribution Margin

The amount by which the sale of a product exceeds its variable costs, contributing to covering fixed costs and generating profit.

Activity Rate

The estimated activity cost divided by estimated activity-base usage.