Mr. Braco is an enrolled agent who prepares tax returns for a living. In preparing Mr. and Mrs. Colter's Form 1040, Mr. Braco claimed a deduction based on an unreasonable legal position. Mr. Braco's compensation for the return was $3,800. What is the consequence to Mr. Braco if the IRS disallows the deduction?

- The IRS can impose a $1,900 penalty on Mr. Braco.

- The IRS can impose a negligence penalty on the Colters but can't penalize Mr. Braco.

- The IRS can terminate Mr. Braco's status as an enrolled agent.

- The IRS can impose a civil fraud penalty on Mr. Braco.