What Is the Requirement for a Substantial Understatement of Tax

question 92

Multiple Choice

What is the requirement for a substantial understatement of tax for individuals?

• A)The understatement exceeds 10% of the tax required to be shown on the return.
• B)The understatement exceeds $5,000.
• C)The understatement exceeds the lesser of 10% of the tax required to be shown on the return or $5,000.
• D)The understatement exceeds the greater of 10% of the tax required to be shown on the return or $5,000.

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Definitions:

Small Business Manager

A person responsible for overseeing and directing the operations of a small business.

Entrepreneur

An individual who initiates, organizes, and operates a business venture, taking on financial risk to do so.

Respect

The act of showing consideration or appreciation towards others, their feelings, and their rights.

Business

The practice of engaging in commercial, industrial, or professional activities to earn a profit.