1- The IRS determined that John underpaid his 2019 tax liability by $6,000 due to negligence. In 2019, John pays $1,000 of interest related to the underpayment and the full amount of any penalties assessed by the IRS.

a. Calculate the amount of the accuracy-related penalty that could be assessed by the IRS in this situation.

b. What part of the deficiency, income taxes, interest and penalty, is deductible by John on his current tax return? Explain.

2- If you’re self-employed and your expected net income is at least $400, you are required to make estimated tax payments __________ to cover both your income tax and your self-employment tax obligations

a. Monthly

b. Quarterly on April 15, June 15, Sept. 15 and Jan. 15 of the following year.

c. On April 15 of the following tax yea

d. Any time before April 15 of the following tax year Topic: Self-employment tax issues: when to pay

3- Which of the following is an exception for early withdrawal penalty of IRA?

a. Rollover into another eligible retirement plan within 60 days

b. Distributions made to beneficiaries of plans inherited after death

c. A disabled individual who is “unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration.

d. All of the above are exceptions

4. Which of the following type of tax is not assessed based on the value of the assets?

a. Real estate tax

b. DMV licenses

c. Gift tax

d. None of the above

Answer rating: 100% (QA)

1a John can deduct the entire amount of the deficiency income taxes interest and penalty on his current tax return The amount of interest and penalty ... View the full answer