Question

QUESTION 1

Mary Jones files her 2014 federal income tax return at an IRS office on February 4, 2016. Her return was on extension until 10/15/15. When does the Statute of Limitations (SOL) expire?

	A.	February 4, 2018
	B.	April 15, 2018
	C.	October 15, 2018
	D.	February 4, 2019

QUESTION 2

Your client's 2014 federal income tax return was filed on 4/15/15. Recently your client received an audit adjustment attributable to the basis of an investment asset, the adjustment of which represents an adjustment of 35% of the gross income reported on the return. At no time has the service secured a statute extension from the client. Here it is July 3, 2018 and your client presents you with the 30 day letter on the proposed adjustment. What do you advise?

	A.	The statute of limitations remains open for six years under IRC § 6501(e).
	B.	The statute of limitations has expired under IRC § 6501(a)
	C.	The statute of limitations remains open under IRC § 6501(c)
	D.	The statute of limitations is open under IRC § 6501(c)(4) because your client didn't raise the statute of limitations defense earlier.

QUESTION 3

Under IRC § 6501(c)(4) a taxpayer may agree to extend the statute of limitations for assessment. Identify the statement that is true.

	A.	To terminate the 872-A statute of limitations (SOL), a taxpayer may submit a form 872-T to the IRS.
	B.	The 872 and 872-A may not be restricted to specific items or issues.
	C.	An 872 will never be secured if the statute of limitations in open under IRC § 6501(e)(1)
	D.	An estate tax return (chapter 11) statute of limitation may be extended by agreement.

Answer 1

The statute of the limitations expiration date for the tax assessment is 3 years from the later of the return filing date and statutory due date.

Return filing Date - 04-Feb-2016

Statutory due date- 15-10-2015

Therefore the statute of limitations would be 15-Oct-2018 i.e. October 15, 2018

2) Since in the given case the substantial omission is more than 25% of gross incomeon the return. In this case, the time limit for the IRS to make assessment gets stretched out to six years from the date the date return is filed or deemed filed whichever is later. So in this case, The statute of limitations remains open for six years under IRC § 6501(e).

3)Under IRC § 6501(c)(4) a taxpayer may agree to extend the statute of limitations for assessment. Identify the statement that is true.

To terminate the 872-A statute of limitations (SOL), a taxpayer may submit a form 872-T to the IRS