Question

In: Statistics and Probability

The IRS reports that 15% of returns where the adjusted gross income is more than $1,000,000 will be subject

The IRS reports that 15% of returns where the adjusted gross income is more than $1,000,000 will be subject to a computer audit. For the year 2017, Fred Friendly, CPA, completed 16 returns where the adjusted gross income was more than $1,000,000.
a. What is the probability exactly one of these returns will be audited?
b. What is the probability at least one will be audited?

Solutions

Expert Solution

The available information shown in below table,

Sample Size Percentage
n = 16 p = 15% = 0.15

 

a)

Calculate the probability that exactly one of these returns will be audited.

             = 16 × 0.15 × 0.0874

             = 0.2097

 

Hence, the required probability is, 0.2097.

 

b)

Calculate the probability that at least one will be audited.

P(X ≥ 1) = 1 – P(X < 1)

              = 1 – P(X = 0)

= 1 – (1 × 1 × 0.0743)

= 1 – 0.0743

= 0.9257

 

Hence, the required probability is, 0.9257.

 

 

Junaid answered 1 year ago
Next > < Previous

Related Solutions

An IRS agent is checking taxpayer’s returns in the $30,000.00 to $40,000.00 income bracket (gross earnings).
Must use codeblocksC++An IRS agent is checking taxpayer’s returns in the $30,000.00 to $40,000.00 income bracket (gross earnings). Each record of the data file contains a tax identification number (four digits), gross earnings, and the amount of taxes paid for the year. If the taxes paid are below 20.5% of the gross earnings, you are to compute the taxes due (assume all taxes are in the bracket of 20.5% of gross earnings). If there are taxes due a penalty charge...
The Internal Revenue Service (IRS) annually processes more than 222 million tax returns. The returns are...
The Internal Revenue Service (IRS) annually processes more than 222 million tax returns. The returns are then converted into electronic records. The information contained in these records is protected by law and considered sensitive. Maintaining this type of information could make the IRS a target for computer hackers—individuals who attempt to gain unauthorized access to computers or computer networks. The IRS has made significant efforts to secure the perimeters of its computer network from external cyberthreats. Because hackers cannot gain...
Please Compute Gross Income, Adjusted Gross income, and Taxable income based on the following information below....
Please Compute Gross Income, Adjusted Gross income, and Taxable income based on the following information below. Salary $299,750.00 Interest income $230.00 Municiple Bond interest $450.00 Treasure bond Interest $675.00 Dividends $1,885.00 Short-Term Capital Gain (SBUX STOCK) $0.00 Short-Term Capital Gain (AMZN STOCK) -$4,350.00 Short-Term Capital Gain (UA Stock) $26.45 Long-term Capital Gain (AAPL STOCK) $3,000.00 Daycare cost for child #1 $10,000.00 Dentist fees (unreimbursed by insurance) $10,500.00 Prescription cost(reimbursed by insurance) $1,380.00 Mortgage Interest $13,478.00 Property Taxes Paid $4,144.00 Vehicle...
Please compute Gross Income and Adjusted gross income based on the following information Salary $187,750.00 Interest...
Please compute Gross Income and Adjusted gross income based on the following information Salary $187,750.00 Interest income $230.00 Municiple Bond interest $450.00 Treasure bond Interest $675.00 Dividends $1,885.00 Short-Term Capital Gain (SBUX STOCK) $0.00 Short-Term Capital Gain (AMZN STOCK) -$4,350.00 Short-Term Capital Gain (UA Stock) $26.45 Long-term Capital Gain (AAPL STOCK) $3,000.00 Daycare cost for child #1 $10,000.00 Dentist fees (unreimbursed by insurance) $10,500.00 Prescription cost(reimbursed by insurance) $1,380.00 Mortgage Interest $13,478.00 Property Taxes Paid $4,144.00 Vehicle registration fee $1,250.00...
The Wall Street Journal reports that 33% of taxpayers with adjusted gross incomes between $30,000 and...
The Wall Street Journal reports that 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000 itemized deductions on their federal income tax return. The mean amount of deductions for this population of taxpayers was $16,642. Assume the standard deviation is σ = $2,400. (a) What is the probability that a sample of taxpayers from this income group who have itemized deductions will show a sample mean within $200 of the population mean for each of the following sample...
The Wall Street Journal reports that 33% of taxpayers with adjusted gross incomes between $30,000 and...
The Wall Street Journal reports that 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000 itemized deductions on their federal income tax return. The mean amount of deductions for this population of taxpayers was $16,642. Assume the standard deviation is σ = $2,400. (a) What is the probability that a sample of taxpayers from this income group who have itemized deductions will show a sample mean within $200 of the population mean for each of the following sample...
The Wall Street Journal reports that 33% of taxpayers with adjusted gross incomes between $30,000 and...
The Wall Street Journal reports that 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000 itemized deductions on their federal income tax return. The mean amount of deductions for this population of taxpayers was $16,642. Assume the standard deviation is σ = $2,400. (a) What is the probability that a sample of taxpayers from this income group who have itemized deductions will show a sample mean within $200 of the population mean for each of the following sample...
Suppose Samantha dies this year with a gross estate of $15 million and no adjusted prior...
Suppose Samantha dies this year with a gross estate of $15 million and no adjusted prior gifts. Calculate the amount of estate tax due (if any) under the following scenarios: Samantha’s husband, Mark, is the sole beneficiary. Mark receives $10 million from the estate and the remainder is donated to the American Red Cross. Mark receives $10 million from the estate and their son, Luke, receives $5 million. Mark receives $10 million and $5 million is placed in a trust....
The adjusted gross income number (AGI) is an important one. It is said it is always...
The adjusted gross income number (AGI) is an important one. It is said it is always better for a deduction to be "for" AGI, i.e., deductible in arriving at AGI. These are also called "above the line" deductions. Why is it better? Can you name any specific benefits to being deductible above the AGI line?   Discuss one or two "above the line" expenses or adjustments to income from the front page of the 1040. Why policy reason do you think...
The Wall Street Journal reports that 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000 itemized deductions on their federal income tax return.
  The Wall Street Journal reports that 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000 itemized deductions on their federal income tax return. The mean amount of deductions for this population of taxpayers was $16,642. Assume the standard deviation is σ = $2,400. (a) What is the probability that a sample of taxpayers from this income group who have itemized deductions will show a sample mean within $200 of the population mean for each of the following...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT