Wanda Wild, the IRS auditor, has finally completed the audit of the 2019 tax return. She has provided Form 4549 and Explanation of Adjustments to you as the representative for the taxpayer. Review the Form 4549 as provided above, focusing on the penalties and interest assessed.

1. Recalculate the amount of penalty and interest and discuss whether you agree with the amounts on the Form 4549.

2. The IRS agent also assessed a preparer penalty against you as the preparer of the return. Is this proper? If not, explain the basis for your argument against it. If you agree with the penalty, what could you have done differently to avoid the penalty?

required tax. The IRS may order backup withholding (withholding of a percentage of your dividend and/or interest income) if the tax remains unpaid after it has been assessed and four notices have been issued to you over a 120 -day period. Meals: 50% of $10,612 total expense. Meals in the amount of $10,612 were not supported by adequate documentation pursuant to Reg. Sec. 1.274-5T. Office supplies: Office supplies in the amount of $11,367 consisted of three desks which were expensed as office supplies rather than being capitalized and depreciated. Equipment: medical equipment with a cost of $56,000 was treated as placed in service on December 27, 2019 and depreciated for 2019. However, we find that the equipment was not installed until January 5, 2020 and therefore was not placed in service in 2019 and should not have been depreciated in 2019. Officer compensation: Per the W-2, Dr. Dan Crowley was paid $538,000 in salary for the year. This compensation is excessive. An adequate salary would be $288,000. Therefore, we are treating the remaining $250,000 as a constructive dividend to Dr. Crowley. required tax. The IRS may order backup withholding (withholding of a percentage of your dividend and/or interest income) if the tax remains unpaid after it has been assessed and four notices have been issued to you over a 120 -day period. Meals: 50% of $10,612 total expense. Meals in the amount of $10,612 were not supported by adequate documentation pursuant to Reg. Sec. 1.274-5T. Office supplies: Office supplies in the amount of $11,367 consisted of three desks which were expensed as office supplies rather than being capitalized and depreciated. Equipment: medical equipment with a cost of $56,000 was treated as placed in service on December 27, 2019 and depreciated for 2019. However, we find that the equipment was not installed until January 5, 2020 and therefore was not placed in service in 2019 and should not have been depreciated in 2019. Officer compensation: Per the W-2, Dr. Dan Crowley was paid $538,000 in salary for the year. This compensation is excessive. An adequate salary would be $288,000. Therefore, we are treating the remaining $250,000 as a constructive dividend to Dr. Crowley