Glenna put money in savings accounts in 50 different banks. She knows a bank is not required to report to the IRS any interest it pays her that totals less than $10. Because the banks do not report the payments to the IRS, Glenna does not report the interest received as taxable income. Which of the following is (are) true?
I.Glenna's actions are tax evasion because she intentionally misrepresented facts on a tax return to avoid paying tax.
II.Glenna's actions are tax avoidance because the IRS will never know about the interest income.
III.Glenna's actions are tax evasion because she took steps to conceal the income.

Question

Glenna put money in savings accounts in 50 different banks. She knows a bank is not required to report to the IRS any interest it pays her that totals less than $10. Because the banks do not report the payments to the IRS, Glenna does not report the interest received as taxable income. Which of the following is (are) true?
I.Glenna's actions are tax evasion because she intentionally misrepresented facts on a tax return to avoid paying tax.
II.Glenna's actions are tax avoidance because the IRS will never know about the interest income.
III.Glenna's actions are tax evasion because she took steps to conceal the income.
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Quizplus · Accepted Answer

Glenna's actions are considered tax evasion because she intentionally misrepresented facts on a tax return to avoid paying tax, which is stated in statement I. Additionally, statement III is also correct because she intentionally took steps to conceal the income by spreading it across multiple banks. However, statement II is not entirely accurate because while the IRS may not initially know about the interest income, they may still discover it through other means, such as an audit or information provided by the banks. Therefore, the best choice is C because only statements I and III are completely accurate.

Glenna Put Money in Savings Accounts in 50 Different Banks