Identify Which of the Following Statements Is True

question 20

Multiple Choice

Identify which of the following statements is true.

• A) If a couple files a joint return but only one spouse had income, only the spouse with income is responsible for paying any tax due.
• B) Joint and several liability means that each spouse is potentially liable for the full amount of tax due.
• C) If a taxpayer fails to file a return, the statute of limitations is extended to 10 years.
• D) All of the above are false.

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Definitions:

Fair Value

An estimate of the price at which an asset or liability could be exchanged in a current transaction between willing parties, other than in a liquidation sale.

Liability Recognition

The process of recording liabilities on the financial statements, ensuring that all existing debts and obligations of a company are reported in accordance with accounting principles.

Note Receivable

A financial asset representing a promise to receive a definite amount of money at a future date, typically with interest.