Choice "C" is correct. A preparer is not required to obtain supporting documentation, unless the preparer has reason to suspect the accuracy of the information provided. However, the preparer must make reasonable inquiries if the information provided by the taxpayer appears incorrect or incomplete.Choice "d" is incorrect. Merely failing to inquire about documentation does not constitute the preparation of a fraudulent return by the tax preparer.Choice "b" is incorrect. If the expenses are disallowed in an audit, the taxpayer may owe an understatement penalty.Choice "a" is incorrect. If the expenses are found to be fraudulent, the taxpayer may be subject to a fraud penalty.