CHAPTER 26 TAX PRACTICE AND ETHICS

Match each of the following tax penalties with the type of tax penalty as specified by the Code. A letter can be used more than once. The correct solution may include more than one letter.

a. Taxpayer penalty

b. Tax preparer penalty

c. Appraiser’s penalty

2. Failure to file a tax return.

3. Fraudulent failure to file a tax return.

4. Failure to sign the return.

5. Negligence.

6. Improper refund claim.

7. Misstatement of withholding allowances.

8. Willful and reckless conduct.

9. Aiding in preparing an improper tax return.

10. Substantial understatement of a tax.

11. Failure to pay a tax.

For each of the indicated tax penalties, indicate the appropriate taxpayer defense. A letter may be used more than once. Not all of the letters might be used.

a. Ignorance of the tax law

b. Reasonable basis

c. Reasonable cause

d. Complexity of the tax law

e. Substantial authority

f. Disclosure on return

12. Negligence in filing a return.

13. Substantial understatement of tax liability.

14. Failure to pay a tax that is due.

15. Undervaluation of a reported item.

16. Filing an improper refund claim.

17. Failure to deposit withholding tax.

18. Preparer penalty for taking an unreasonable tax return position.

19. Preparer penalty for reckless conduct.