The IRS now has more than a century of accumulated experience in dealing with taxpayers who exaggerate (or lie) on their tax returns. You’ve learned that on the basis of all of that hard-won wisdom which of the following is the IRS most suspicious of most of the time?
The IRS now has more than a century of accumulated experience in dealing with taxpayers who exaggerate (or lie) on their tax returns. You’ve learned that on the basis of all of that hard-won wisdom which of the following is the IRS most suspicious of most of the time?
(a) Taxpayers claiming to be self-employed in an activity that sounds enjoyable – e.g., treasure hunting – even if year after year they report substantial net profits and have never reported a loss.
(b) Taxpayers claiming more than the number of dependents whose names fit on the front of Form 1040 (four).
(c) The unreasonable (“not ‘ordinary and necessary’”) cost of rooms at those wonderful but very expensive resort hotels at which the AICPA and other profes-sional organizations hold their annual continuing education tax conferences.
(d) Very large (relative to income level) Schedule A charitable contribution de-ductions.
(e) Any self-employed accountant who claims a “traditional method” (Form 8829) home office deduction on her / his Schedule C instead of the new simplified method.
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