Compute appraisers penalty to which vargas might be exposed

Assignment Help Accounting Basics

Reference no: EM131908345

Problem

Kaitlin donated a painting to the local art museum. As she is subject to a 35% marginal tax rate, she needs a large charitable contribution deduction for the year. She engaged Vargas (who was referred to her by the staff of the museum) to provide an appraisal of the painting before she filed her Form 1040 for the year. Kaitlin told Vargas, "Be kind to me on this appraisal, and I'll send several more clients to you in the future." Kaitlin paid Vargas a $45,000 fee for his services. Vargas completed his appraisal and determined that the painting was worth $500,000 under current market conditions. Still, in light of Kaitlin's promise of future business, Vargas sent Kaitlin an official appraisal reporting a $900,000 value for the artwork. Vargas had never compromised his integrity, but this time the temptation was too much. Kaitlin used the appraisal to claim a $900,000 deduction for her charitable gift. Kaitlin will incur a valuation penalty now that her Form 1040 has been audited and the IRS has determined that the correct amount of the deduction is $500,000.

A. Compute any appraiser's penalty to which Vargas might be exposed.

Required Form:

Irs Form 8283.

Reference no: EM131908345

Questions Cloud

Define perfect expectation and opportunity-cost damages : Perfectly competitive markets contain many buyers and sellers of the same contract; so, the best alternative contract is identical to the actual contract.

What is the economic order quantity : What is the Economic Order Quantity (EOQ)? What is the number of orders per year if the company uses the EOQ order?

Firm weighted average cost of capital : The debt-equity ratio is 0.45. There are no taxes. What is the firm's weighted average cost of capital?

Examine the effects of overbooking : Airlines routinely sell more tickets for flights than the number of seats on the plane. "Overbooking" seldom causes problems because a statistically predictable

Compute appraisers penalty to which vargas might be exposed : Kaitlin donated a painting to the local art museum. Compute any appraiser's penalty to which Vargas might be exposed.

What will be its stock price in one year : Assuming that Szanto Porsche's price/earnings ratio increases by 1, what will be its stock price in one year.

Estimation of a company financial performance : Several types of stakeholders and investors attempt to arrive at an estimation of a company's financial performance and its future outlook for investment

Discuss the timeline for breach of contract : Here is a timeline for breach of contract that leads to litigation. On Jan. 1, A contracts to deliver a widget to B on June 1 at a price of $2 to be paid.

What is zh total cash flow from operating activities : What is ZH's total Cash Flow from Operating Activities?

User Account

All Pages