1. Rivera underpaid her income tax by $45,000. The IRS can prove that $40,000 of the underpayment was due to fraud.

If required, round your answers to the nearest dollar.

a. Determine Rivera's civil fraud penalty. $____________

b. Rivera pays the penalty five years after committing the fraudulent act. Compute the present value of Rivera's penalty. Assume her after-tax rate of return on available cash is 9%. The present value factor for 5 years and 9% is 0.6499. $_____________

2. On June 15, 2018, Sheridan filed his 2017 income tax return, paying a tax of $25,400. On October 5, 2019, he filed an amended 2017 return showing an additional $15,240 of tax, which he paid with the amended return. On August 22, 2021, he filed a claim for a refund of $16,764.

Assuming that Sheridan is correct in claiming a refund, how much tax can he recover? $_________________