A six-year statute of limitation rule applies if the taxpayer
A)understates taxable income by 25%.
B)understates AGI by 25%.
C)understates gross income by 25%.
D)none of the above

Question

Quizplus · Accepted Answer

According to the IRS, if a taxpayer understates their gross income by 25% or more, the statute of limitations for the IRS to assess additional tax is extended from three years to six years. This means that the IRS has six years from the time a return is filed to assess additional tax if gross income is understated by 25% or more.

A Six-Year Statute of Limitation Rule Applies If the Taxpayer