Reference no: EM132889467

Problem 1: Malik, Inc., a calendar year C corporation subject to a 21% flat income tax rate, claimed a Form 1120 charitable contribution deduction of $40,000 for a sculpture that the IRS later valued at $10,000. The applicable overvaluation penalty is:

a. $0.

b. $1,260.

c. $1,680.

d. $2,520.

e. $3,360.

Problem 2: The tax penalty imposed on appraisers:

a. Can be as much as 125% of the appraisal fee that was charged.

b. Is waived if the taxpayer also was charged with his or her own valuation penalty.

c. Equals 25% of the appraised value of the property, with a $10,000 minimum penalty.

d. Applies only if the appraiser actually knew that the appraisal would be used in preparing a Federal income tax return.

e. Is imposed only with respect to gift and estate tax returns.