1. Although she left her job in November of Year 1, Patrice was entitled to a year-end bonus. On December 30, her former boss called her to let her know the check was available. Patrice did not pick up the check until January 3, Year 2. Her W-2 for Year 1 did not include the bonus, so Patrice did not include it in gross income for her Year 1 tax year when she filed the return on April 15, Year 2. In Year 2, she received a W-2 in the amount of the bonus, but Patrice decided she should have included it in her Year 1 gross income because she "constructively received" it in Year 1. Therefore she did not include it in her Year 2 return, which she filed on April 15, Year 3.
On May 1, Year 5, the IRS mailed Patrice a notice of deficiency for her Year 2 tax year based on the unreported bonus. Patrice petitioned the Tax Court, and on June 1, Year 6, the Tax Court's decision in Patrice's favor became final. The decision was made on the ground that the bonus should have been income for Patrice's Year 1 tax year. The statute of limitations on assessment for Year 1 expired in Year 5.
A- What recourse does the IRS have?
B- If the IRS has an option under part A, what action would it have to take, and by what deadline?
Gail filed her Year 1 return on April 15, Year 2. On March 3, Year 5, the IRS asked Gail to agree to extend the statute of limitations on assessment. On March 5, year 5, Gail signed a Form 872, specifying an extension of the statute until April 15, Year 6. Subsequently, Gail signed additional Forms 872, on April 1, Year 6 and May 1, Year 7, each providing an additional 1-year extension. When is the last day that the IRS can send Gail a notice of deficiency as a prerequisite to assessing tax with respect to Gail's Year 1 tax year?
Darcy has received a notice of deficiency from the IRS in the amount of $20,000.
A- What should Darcy do if she wishes to dispute the notice in Tax Court?
- Does she have to pay the deficiency at this point?
- Is she precluded from paying the deficiency at this point?
B- Assume that Darcy believes that the notice is incorrect, and that she is actually entitled to a refund of $10,000. May she litigate in Tax Court both the issues in the notice and the issues she believes entitle her to a refund?
George received a notice of deficiency on February 20, Year 4 with respect to his Year 1 return. The notice of deficiency is based on unreported income. George timely petitioned the Tax Court on April 9, Year 4. Several months before trial, on June 1, Year 5, the IRS raised an additional issue (the disallowance of certain deductions on his Year 1 return), and moved to amend its answer to the petition. What procedural defenses or arguments can George raise with respect to the new issue?
On April 20, Year 4 Sheila received a notice of deficiency from the IRS with respect to her Year 1 taxable year. The notice was dated December 1, Year 3. It had been mailed to her prior address, where her former roommate still resides. Sheila filed her Year 2 and Year 3 returns after moving to her current address, and that address was on those returns. Sheila also has a forwarding order in with the Post Office, but they delivered the notice to her old address anyway. Her former roommate apparently received the envelope but did not open it. She finally put it in the mail to Sheila with some other documents; Sheila received it yesterday and brought it to you to ask what to do. She is concerned because the notice reflects an asserted deficiency of $50,000, which she cannot afford to pay in full. What do you advise?
Which taxpayer rights have been weakened by the Uncertain Tax Position disclosure requirements?