Malik, Inc., a calendar year C corporation subject to a 21% marginal income tax rate, claimed a Form 1120 charitable contribution deduction of $30,000 for a sculpture that the IRS later valued at $10,000. The applicable overvaluation penalty is:

Question

Quizplus · Accepted Answer

The overvaluation penalty does not apply because the difference between the claimed value ($30,000) and the IRS-determined value ($10,000) does not exceed 200% of the correct amount, nor does the penalty amount meet the $5,000 threshold for corporations.