Which of the following should increase the likelihood that Mr.and Mrs.McNut's Form 1040 will be selected for audit by the IRS?
A) Mrs.McNut is self-employed and reported a $112,000 loss on her Schedule C.
B) The McNuts claim two additional standard deductions because they are both over age 65.
C) The McNuts reported a $12,600 nonbusiness bad debt for a loan to their grandchild as a capital loss on Schedule D.
D) Both Mrs.McNut being self-employed and reporting a $112,000 loss on her Schedule C and the McNuts reporting a $12,600 nonbusiness bad debt should increase the likelihood of audit.
Correct Answer:
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