Mr.Hepp,a self-employed consultant,failed to include a $38,200 income item on his 2016 Form 1040,which he filed on March 9,2017.The gross income reported on the return was $102,380.What is the latest date that the IRS can assess any additional 2016 tax?

Question

Quizplus · Accepted Answer

The general rule is that the IRS has three years from the date a tax return is filed to assess any additional tax. Therefore, the latest date that the IRS can assess any additional 2016 tax is April 15, 2020 (three years from the tax return due date). However, since the taxpayer failed to include an income item exceeding 25% of the gross income stated on the return, the statute of limitations for assessment is extended to six years from the filing date of the return, which would be March 9, 2023. Therefore, choice D (April 15, 2023) is the best choice since it is the only option that falls within the six-year extended statute of limitations period.

MrHepp,a Self-Employed Consultant,failed to Include a $38,200 Income Item on His