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Ms. Barth is a professional tax return preparer. Three years ago, she prepared the Form...

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Accounting

Ms. Barth is a professional tax return preparer. Three years ago, she prepared the Form 1120 for Denver Inc. Her fee for the preparation was $14,850. Upon audit of the return, the IRS disallowed a $112,000 deduction, which increased the corporations tax liability by $39,200.

a. Compute Ms. Barths preparer penalty if the IRS concludes that Ms. Barth had no reasonable legal basis for claiming the deduction and was not acting in good faith by doing so.

b. Compute Ms. Barths preparer penalty if the IRS concludes that Ms. Barth intentionally disregarded the tax law by claiming the deduction in a willful attempt to understate Denvers tax.

c. Compute Ms. Barths preparer penalty if the IRS concludes that what would your answers to (a) and (b) be if Ms. Barths preparation fee was only $3,500?

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