1. Mr. Rouses tax situation for the year is very complicated. He engaged in several multimillion dollar investment transactions involving unresolved tax issues. He has instructed his accountant to take the most aggressive position possible with respect to these transactions. Mr. Rouse also wants to take a business travel deduction for a trip on which his wife and two daughters accompanied him. The deduction would be only $7,293. Can you suggest any strategic reason why he should forgo the business travel deduction?

2. Mr. and Mrs. Pratt failed to apply for an extension of time to file their 2019 Form 1040 and didnt mail the return to the IRS until May 29, 2020. Assuming the Pratts had no excuse for filing a delinquent return, compute their late-filing and late-payment penalty if

1. The return showed a $19,758 balance of tax due.

2. The return showed a $7,098 refund due.