Question 1

Taxpayer A filed their Year 1 tax return on April 15, Year 2. The return omitted ,000 of gross income, which exceeded 25% of the gross income stated on the return. No fraud was involved. What is the latest date the IRS can assess additional tax?

Accepted Answer

Determine the applicable statute: Standard (3 years), Substantial Omission >25% (6 years), or Fraud/No Filing (Unlimited). Calculate from the later of the due date or filing date.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Applying the 3-year rule or thinking it's unlimited (fraud).

Taxpayer A filed their Year 1 tax return on April 15, Year 2. The return omitted ,000 of gross income, which exceeded 25% of the gross income stated on the return. No fraud was involved. What is the latest date the IRS can assess additional tax?

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