Question
Harold and Wynona, his wife, are in the 35% marginal tax bracket in the current year. Wynona fraudulently omits from their joint return $80,000 of
Harold and Wynona, his wife, are in the 35% marginal tax bracket in the current year. Wynona fraudulently omits from their joint return $80,000 of gross income. Harold does not participate in or know of her fraudulent act. Harold, however, overstates his deductions by $7,000 because of an oversight.
| a. | If the government successfully proves fraud in a civil suit against Wynona, what fines and/or penalties might she owe? If Harold and Wynona establish that the overstatement is not attributable to fraud, can the government impose a civil fraud penalty on Harold? |
| b. | If the government successfully proves fraud in a criminal suit against Wynona, what fines or penalties might she owe? Could she or Harold be sentenced to prison? |
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Principles Of Auditing And Other Assurance Services
Authors: Ray Whittington, Kurt Pany
22nd Edition
126059808X, 978-1260598087
