As a result of undervaluing property transferred by gift,Dan owes additional gift taxes of $3,000.The penalty for undervaluation does not apply in this situation,because the tax understatement was too small.

Question

Quizplus · Accepted Answer

The statement is true. The penalty for undervaluation only applies if the tax understatement exceeds a certain threshold, which is usually a percentage of the total tax liability. In this case, the understatement is only $3,000, which is below the threshold for imposing a penalty.

As a Result of Undervaluing Property Transferred by Gift,Dan Owes