Which of the Following Statements Does Not Reflect the Rules

question 81

Multiple Choice

Which of the following statements does not reflect the rules governing the accuracy-related penalty for negligence?

• A) The penalty rate is 20%.
• B) The penalty is imposed only on the part of the deficiency attributable to negligence.
• C) The penalty applies only to intentional tax understatements by the taxpayer.
• D) The penalty is waived if the taxpayer uses Form 8275 to disclose a return position that is reasonable though contrary to the IRS position.

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Definitions:

Normal Balance

The normal balance is the side (debit or credit) of an account that is expected to have a higher balance based on the accounting equation.

Financial Statement(s)

Reports summarizing the financial performance, position, and cash flows of a business over a specified period, including balance sheet, income statement, and cash flow statement.

Permanent/Temporary

Defines classifications of accounts in accounting where permanent accounts refer to balance sheet items that carry over into the next fiscal period, while temporary accounts are closed at the end of each accounting period.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, indicating the account’s increase.