failure to pay penalty

[indyscott]

My client owes $21K on their 1040 (due to income from sale of business). They can take it out of their invested funds now, or I told them they could pay part now and do an installment agreement.

The 9465 instructions say that there's automatic approval on requests up to $10,000, but only if the T's can't pay it all now. Has anyone had a 9465 denied if the T's can pay by cashing out investments?

The underpayment penalty rules say that if you have an installment agreement your underpayment penalty is 1/4 of 1% of the unpaid amount per month. That would be plus the interest, which is ___% right now?

So, if they thought their rate of return on their investments would do better than the interest + 1/4% plus the $105 application fee, wouldn't they be better off to get an installment for 12 mo for $10,000??

This seems like a bit of a flim flam, and normally the clients cook up enough of that on their own, so I'm not sure why I'm suggesting it myself. I guess if I had a crystal ball and knew that the $10,000 they kept invested would grow a lot, and not shrink instead, I could advise them confidently.

I think I've answered my own question..