Which of the following should increase the likelihood that Mr. and Mrs. McNut's Form 1040 will be selected for audit by the IRS?

Question

Quizplus · Accepted Answer

Both option A and C are red flags for the IRS. Mrs. McNut's reported loss on her Schedule A may raise questions about the legitimacy of her business expenses, while the reporting of a nonbusiness bad debt as a capital loss on Schedule D can also draw attention to the McNuts' reporting practices. Therefore, the combination of these two factors increases the likelihood that their Form 1040 will be selected for audit by the IRS. Option B, on the other hand, is a legitimate deduction for taxpayers over age 65 and should not increase the likelihood of an audit.

Which of the Following Should Increase the Likelihood That Mr