Georgio, a calendar year taxpayer subject to a 33% marginal Federal income tax rate, claimed a Form 1040 charitable contribution deduction of $300,000 for a sculpture that the IRS later valued at $120,000 . The applicable overvaluation penalty is:
a. $10,000 (maximum penalty).
b. $12,000.
c. $24,000.
d. $60,000.
c
RATIONALE: $59,400 (additional tax) × 40% (penalty rate for gross overvaluation) = 23,760.
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