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The U.S. Internal Revenue Service (IRS) has the authority to impose penalties on companies that significantly underpay taxes as a result of inappropriate transfer pricing. Acme Company transfers a product to a foreign affiliate at $15 per unit, and the IRS determines the correct price should have been $65 per unit. The adjustment results in an increase in U.S. tax liability of $1,250,000. Due to this change in price, what amount of penalty for underpayment of taxes will Acme Company pay?

1 Answer

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Answer:

$500000

Step-by-step explanation:

Please see attachment

The U.S. Internal Revenue Service (IRS) has the authority to impose penalties on companies-example-1
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