If a return is identified as including an unallowable item, the IRS:
A) Computes the seemingly necessary adjustment in taxes, and the taxpayer is notified by mail.
B) Sends a formal notice of deficiency to the taxpayer.
C) Considers the contact that it makes with a taxpayer under this circumstance to be an examination.
D) Cancels the return and asks the taxpayer to file his return again.

Question

Quizplus · Accepted Answer

If an unallowable item is identified in a return, the IRS will compute the necessary adjustment in taxes and notify the taxpayer by mail. This is not considered an examination, and the return is not automatically canceled unless there are other issues with it. The IRS may also request additional information or documentation related to the unallowable item. A formal notice of deficiency would only be sent if there are more significant issues with the return or discrepancies that cannot be resolved through correspondence.

If a Return Is Identified as Including an Unallowable Item