Which of the following should increase the likelihood that Mr. and Mrs. McNut's Form 1040 will be selected for audit by the IRS?

Question

Quizplus · Accepted Answer

Both option A and C should increase the likelihood of audit because they involve deductions or losses that may be seen as potentially suspicious by the IRS. Claiming a large loss on a Schedule C could indicate that the taxpayer is inflating expenses to reduce their taxable income, while reporting a nonbusiness bad debt as a capital loss on Schedule D may raise questions about the authenticity of the debt. Option B is unlikely to affect the likelihood of audit, as claiming standard deductions for being over 65 is a legitimate tax benefit.

Which of the Following Should Increase the Likelihood That Mr