On April 15, 2015, a married couple filed their joint 2014 tax return showing gross income of $120,000. Their return was prepared by a professional tax preparer who mistakenly omitted
$45,000 of income, which the preparer in good faith considered to be nontaxable. No information with regard to this omitted income was disclosed on the return or attached statements. By what date must the IRS assert a notice of deficiency before the statute of limitations expires?

Question

Quizplus · Accepted Answer

The IRS generally has three years to audit a tax return, but if more than 25% of gross income is omitted, the statute of limitations extends to six years. Here, $45,000 is more than 25% of the reported $120,000, so the IRS has until April 15, 2021, to assert a notice of deficiency.

On April 15, 2015, a Married Couple Filed Their Joint