Charley Careless had not read much about the preparer penalties that could be assessed for failure to have substantial authority for certain tax positions taken on his client's returns. He prepared a return for one of his clients with an issue that was clearly a problem. If he was paid $4,000 for the tax return preparation, how much would his potential fine be under the following circumstances:
a. Charley should have known that the position did not have a reasonable possibility of success but had failed to do any research.
b. Charley knew the position was "iffy" but disclosed the problem.
c. Charley knew the position could not be supported but the client expected Charley to get him a large refund.

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The Answer of Charley Careless had not read much about the preparer penalties that could be assessed for failure to have substantial authority for certain tax positions taken on his client's returns. He prepared a return for one of his clients with an issue that was clearly a problem. If he was paid $4,000 for the tax return preparation, how much would his potential fine be under the following circumstances:
a. Charley should have known that the position did not have a reasonable possibility of success but had failed to do any research.
b. Charley knew the position was "iffy" but disclosed the problem.
c. Charley knew the position could not be supported but the client expected Charley to get him a large refund.

Charley Careless Had Not Read Much About the Preparer Penalties