Anthony,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

Anthony,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?

Quizplus · Accepted Answer

The six-year statute of limitations applies if a taxpayer omits from gross income an amount that is greater than 25% of the amount of gross income stated in the tax return. In this case, Anthony's gross income reported on the return is $850,000. Therefore, an omission from gross income greater than 25% of $850,000, which is $212,500, would be required before the six-year statute of limitations would apply.

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