This year,the IRS audited Mr.and Mr.Simon's 2014 income tax return and determined that they underpaid their tax by $13,780.Which of the following statements is true?

Question

Quizplus · Accepted Answer

This choice correctly states two true statements about tax deficiencies: (1) the government charges interest on a deficiency, and (2) individuals can deduct the interest paid on a tax deficiency as an itemized deduction on their tax return. The other choices are incorrect. Choice A is incorrect because even if the Simons made a reasonable attempt to compute their tax, they may still owe the deficiency plus interest. Choice B is incorrect because it implies that the Simons will definitely pay the entire deficiency amount, which may not be the case if they have valid reasons to dispute the audit findings. Choice D is incorrect because the amount of any penalty assessed will depend on the taxpayer's level of negligence or willful disregard of the tax laws.

This Year,the IRS Audited Mr