Question

In: Accounting

Interest paid on an underpayment of taxes (other than an underpayment of estimated taxes) is not subject to the consumer interest limitation.

Interest paid on an underpayment of taxes (other than an underpayment of estimated taxes) is not subject to the consumer interest limitation.

(a) True

(b) False

 

 

Solutions

Expert Solution

True

Interest paid on underpayment of tax is not subject to the consumer interest limitation. The taxpayer needs to pay interest on underpayment of tax like that if the overpayment is made by the taxpayer the IRS will pay interest on the amount which is excess paid. Consumer interest is the interest on the individuals such as a personal loan or credit card debt etc. and the interest paid on underpayment of tax is not related to the consumer interest limitation. As per the general rule, the interest on underpayment of tax and interest on overpayment for the same period may provide a net interest rate as zero.

This statement is True.

Junaid answered 1 year ago
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