On April 15, 2018, a married couple filed their joint 2017 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?
A)April 15, 2024
B)December 31, 2018
C)April 15, 2021
D)December 31, 2024

Question

Quizplus · Accepted Answer

The IRS typically has three years from the date a tax return is filed to audit the return and assert a notice of deficiency. However, if a taxpayer omits more than 25% of their gross income on their tax return, the statute of limitations is extended to six years. In this case, the couple omitted $45,000 out of $120,000, which is more than 25% of their gross income. Therefore, the IRS has until April 15, 2024, to assert a notice of deficiency, which is six years from the original filing deadline of April 15, 2018.

On April 15, 2018, a Married Couple Filed Their Joint