Brandon, a calendar year taxpayer subject to a 36% marginal tax rate, claimed a charitable contribution deduction in 2009 of $600,000 for a sculpture that the IRS later valued at $200,000.The applicable overvaluation penalty is:

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The overvaluation penalty is 20% of the underpayment of tax attributable to the overvaluation. The overvaluation amount is $400,000 ($600,000 - $200,000). The tax underpayment is $144,000 ($400,000 x 36%). The penalty is 20% of $144,000, which is $28,800.

Brandon, a Calendar Year Taxpayer Subject to a 36% Marginal