The IRS assessed a $40,700 income tax deficiency plus $4,970 interest against Mr. and Mrs. Reczyk because of an alleged understatement of investment income. They refused to pay and took their case to the U.S. Tax Court. The Reczyks incurred $7,980 attorney fees and other costs of the litigation. Indicate which costs the Reczyks are liable for in each of the following circumstances.

Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.

Required:

The Reczyks won their case, and the IRS failed to demonstrate that its position was substantially justified.

check all that apply 1

Deficiency of $40,700unanswered

Interest of $4,970

Attorney fees and litigation costs of $7,980unanswered

None of the choices is correctunanswered

The Reczyks won their case, but the IRS convinced the court that its position was substantially justified.

check all that apply 2

Deficiency of $40,700unanswered

Interest of $4,970unanswered

Attorney fees and litigation costs of $7,980unanswered

None of the choices is correct

The Reczyks lost their case.

check all that apply 3

Deficiency of $40,700unanswered

Interest of $4,970

Attorney fees and litigation costs of $7,980unanswered

None of the choices is correctunanswered