Betty Hires Sam to Prepare Her Federal Income Tax Return

question 96

Multiple Choice

Betty hires Sam to prepare her federal income tax return.In preparing the return,Sam erroneously decided to exclude consulting fees because he estimated that Betty's expenses should have exceeded the income she received.If the IRS detects Betty's underpayment of tax,what is the likely result?
I.Betty is not subject to the negligence penalty since she relied on a professional tax preparer and reported her income in good faith.
II.Sam is liable for payment of Betty's tax due plus interest and negligence penalty.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct
• D)Neither statement is correct

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Definitions:

Higher Class

A social stratum associated with high status, wealth, and power in a society.

Celebrity

A well-known individual, especially in entertainment or sports, who commands a significant degree of public fascination and influence.

Negative Reinforcement

A behavioral technique in which the removal of an undesirable or unpleasant stimulus following a behavior increases the likelihood of that behavior being repeated.

Wearout

The diminishing returns in effectiveness or impact of an advertisement or message over time due to repeated exposure, leading to boredom or annoyance in the audience.