Indicate in the blank space the date the statute of limitations would run out on
ID: 2488073 • Letter: I
Question
Indicate in the blank space the date the statute of limitations would run out on each of the following individual tax returns.
a. A 2015 tax return filed on April 15, 2016 which omitted $20,000 of income. The total gross income shown on the tax return was $40,000
b. A 2015 tax return filed April 15, 2016 which contained a large bad debt deduction
c. A 2000 tax return that was never filed (but should have been filed)
d. A 2015 tax return filed on April 15, 2016
e. A fraudulent 2015 tax return filed April 15, 2016
Explanation / Answer
The question is very specific in nature and the explanations have been provided as and where applicable.
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Part 1)
A 2015 tax return filed on April 15, 2016 which omitted $20,000 of income. The total gross income shown on the tax return was $40,000
The ommited income of $20,000 is more than 25% of the gross income reported on the return. In this case, the statue of limitation would extend to 6 years from the due date or actual date of filing the return whichever is later.
The date the statute of limitations would run out would be 15th April 2022 (6 Years from date of filing return with ommission).
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Part 2)
The statue of limitation in case of bad-debt deduction extends to 7 years from the due date or actual date of filing the return whichever is later.
The date the statute of limitations would run out would be 15th April 2023 (7 Years from date of filing return with bad debt reduction).
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Part 3)
In case of non-filing of tax return for any year, there is no statue of limitation.
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Part 4)
In case of a normal tax return, the statue of limitations extends to 3 years from the due date or actual date of filing the return whichever is later.
The date the statute of limitations would run out would be 15th April 2019 (3 Years from date of filing return).
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Part 5)
In case of non-filing of tax return for any year, there is no statue of limitation.