Mel recently received a 30-day letter from the IRS. Although his tax return being audited has several potential large issues (potential tax consequences of $70,000 - $80,000), the IRS agent auditing his return only identified one item that will require a modest adjustment of $10,000. Mel feels strongly that the $10,000 adjustment would not hold up in court and was surprised that the IRS agent did not identify some of the other potential larger issues. What are Mel's choices with respect to the 30-day letter and what factors should influence his decisions?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Mel recently received a 30-day letter from the IRS.
Although his tax return being audited has several
potential large issues (potential tax consequences of
$70,000 - $80,000), the IRS agent auditing his return
only identified one item that will require a modest
adjustment of $10,000. Mel feels strongly that the
$10,000 adjustment would not hold up in court and
was surprised that the IRS agent did not identify
some of the other potential larger issues. What are
Mel's choices with respect to the 30-day letter and
what factors should influence his decisions?
Transcribed Image Text:Mel recently received a 30-day letter from the IRS. Although his tax return being audited has several potential large issues (potential tax consequences of $70,000 - $80,000), the IRS agent auditing his return only identified one item that will require a modest adjustment of $10,000. Mel feels strongly that the $10,000 adjustment would not hold up in court and was surprised that the IRS agent did not identify some of the other potential larger issues. What are Mel's choices with respect to the 30-day letter and what factors should influence his decisions?
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