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:

Congenital Defect

A physical or biochemical problem that is present at birth and may be caused by genetic factors or by prenatal events that are not genetic.

Iron Dextran

A medication used to treat iron deficiencies and anemia, administered intravenously or intramuscularly.

Iron-Deficiency Anemia

A form of anemia caused by a lack of sufficient iron to produce healthy red blood cells.

Formed Elements

The cells and cell fragments in the blood, including red cells, white cells, and platelets, essential for bodily functions.