Probably the easiest question that will be asked in this forum for Q1:
On April 15, Year 2, a married couple filed their joint Year 1 calendar-year return showing gross income of $120,000. Their return had been prepared by a professional tax preparer who mistakenly omitted $45,000 of income, which the preparer in good faith considered to be nontaxable. No information with regard to this omitted income was disclosed on the return or attached statements. By what date must the lnternal Revenue Service assert a notice of deficiency before the statute of limitations expires?
a.
April 15, Year 8.
b.
December 31, Year 4.
c.
April 15, Year 5.
d.
December 31, Year 7.
For Statute of Limitations pertaining to 25% understatement of income, it states “Good faith mistakes do not affect this determination”. Does this mean that if the intention was in good faith then the 6 years does NOT apply? Or does the 6 years apply even if it was in good faith? The answer is 6 years from 4/15 but I assumed since it was in good faith that it would be 3 years (the statute for assessments). Thank you!
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