Compute Marcella overvaluation penalty

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Reference no: EM132650746

Problem - Marcella (a calendar year taxpayer) purchased a sculpture for $5,000. When the sculpture is worth $12,000 (as later determined by the IRS), Marcella donates it to the Peoria Museum of Art, a public charity. Based on the appraisal of a friend, Marcella deducts $38,000 for the donation. Because Marcella was in the 24% marginal Federal income tax bracket, overstating the deduction by $26,000 results in a tax underpayment of $6,240.

Required -

a. Compute Marcella's overvaluation penalty.

b. Construct a Microsoft Excel formula that will compute the penalty for all noncorporate taxpayers.

Reference no: EM132650746

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