During the audit of Mr. and Mrs. Luce's 2007 tax return, the revenue agent concluded that the couple had claimed a $26,300 deduction that was not allowable by the Internal Revenue Code. The improper deduction reduced the couple's 2007 tax by $9,205. The Luces' total tax deficiency for 2007 was $13,890.

a. Compute the penalty that the IRS agent can impose if he concludes that the improper deduction was attributable to the Luces' negligence.

b. Compute the penalty that the IRS agent can impose if he concludes that the improper deduction was attributable to the Luces' fraud.