Exercise 17-19 (Algorithmic) (LO. 6) Rivera underpaid her income tax by $45,000. The IRS can...
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Exercise 17-19 (Algorithmic) (LO. 6)
Rivera underpaid her income tax by $45,000. The IRS can prove that $40,000 of the underpayment was due to fraud.
If required, round your answers to the nearest dollar.
a. Determine Rivera's civil fraud penalty. $30,000 is incorrect
b. Rivera pays the penalty five years after committing the fraudulent act. Compute the present value of Rivera's penalty. Assume her after-tax rate of return on available cash is 9%. The present value factor for 5 years and 9% is 0.6499. $19,497 is incorrect.
Please provide a solution with an explanation. [Tax Question]
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