Question

What is the statute of limitations for transactions​ involving: a. Fraud​ (e.g., failure to file a tax​ return) b. Disallowance of tax deduction items c. The omission of rental income that is equal to greater than​ 25% of the​ taxpayer's reported gross income

Answer 1

Answer:

The statute of limitations is as indicated for different cases:

a: Fraud: The statute of limitations remains open.

b:Disallowance of tax deduction items: The assessment is made within three years from the later date of tax filing or due date.

c: The omission of rental income that is equal to greater than​ 25% of the​ taxpayer's reported gross income: A six year statute of limitation is applicable.

Explanation:

The statute of Limitations for the following cases are

a. Fraud​ (e.g., failure to file a tax​ return)

In this case the statute of Limitations indicate that The statute of limitations remains open indefinitely if a fraudulent return is filed or if no return is filed at all.

b. Disallowance of tax deduction items

In this case the statute of Limitations indicate that The general rule for the disallowance of tax deduction items is that an assessment may be made against the taxpayer within three years from the later of the date the tax return was filed or its due date.

c:The omission of rental income that is equal to greater than​ 25% of the​ taxpayer's reported gross income

In this case the statute of Limitations indicate that A six year statute of limitations applies if the taxpayer omits an item of gross income that is in excess of​ 25% of the gross income that is reported on the return.