Jake,an individual calendar year taxpayer,incurred the following transactions.
Assuming that any error in timely reporting these amounts was inadvertent,how much omission from gross income would be required before the six-year statute of limitations would apply?

Question

Quizplus · Accepted Answer

The six-year statute of limitations applies when the taxpayer omits from gross income an amount that is more than 25% of the gross income stated in the tax return. In this case, the total gross income reported is $375,000 ($100,000 + $50,000 + $150,000 + $75,000). Therefore, an omission from gross income of more than 25% of $375,000, which is $93,750 ($375,000 x 0.25), would trigger the six-year statute of limitations. Only option C, which states an omission of more than $207,500, exceeds this threshold.

Jake,an Individual Calendar Year Taxpayer,incurred the Following Transactions