Compute the Failure to Pay and Failure to File Penalties

question 164

Essay

Compute the failure to pay and failure to file penalties for John,who filed his 2016 income tax return on December 14,2017,paying the $10,000 amount due.On April 1,2017,John submitted a six-month extension of time in which to file his return; he paid no tax with the extension request.He has no reasonable cause for failing to file his return by October 15,or for failing to pay the tax that was due on April 15,2017.John's failure to comply with the tax laws was not fraudulent.

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Definitions:

Banking System Reserves

The portion of deposits that banks must hold in reserve and not lend out, often held at the central bank to ensure liquidity.

Money Supply

The sum of financial resources, comprising cash and deposits in banks, accessible in an economy at a particular moment.

Price Level(P)

A measure of the average prices of goods and services in an economy, often used to compare the overall cost of living or inflation rate over time.

Money Demanded

The total amount of money that households and businesses want to hold at a given time, influenced by interest rates, income, and prices.