A Taxpayer's Return Is Audited and Additional Taxes Are Assessed

question 56

Multiple Choice

A taxpayer's return is audited and additional taxes are assessed. The IRS also asserts that a negligence penalty should be assessed. The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence. What is the amount of the penalty for negligence?

• A)$700
• B)$1,400
• C)$5,600
• D)$1,750

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance or sizes of components in a dataset, providing a measure that reflects their relative contributions.

Inventory Costing Methods

Techniques used to determine the cost of inventory sold and remaining in stock, including FIFO, LIFO, and average cost methods.

Periodic Inventory System

An inventory accounting system where updates to the inventory accounts are made periodically, typically at the end of an accounting period, rather than continuously.

Physical Inventory

A detailed listing of merchandise on hand.