Mr and Mrs

question 76

Multiple Choice

Mr. and Mrs. Pitt filed a joint tax return last year. The couple divorced this year. The IRS audited their last year's return and determined that the Pitts had underpaid their tax by $38,200. Which of the following statements is true?

• A) The IRS can assess either Mr. Pitt or Mrs. Pitt for the entire deficiency.
• B) Because the couple is divorced, the IRS must assess Mr. Pitt with a $19,100 deficiency and Mrs. Pitt with a $19,100 deficiency.
• C) Because the couple is divorced, the IRS must apportion the deficiency between Mr. and Mrs. Pitt based on their relative contribution to taxable income.
• D) The IRS must assess whichever spouse actually prepared the return for the entire deficiency.

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Definitions:

Reconstruction Bias

a type of cognitive bias that involves memory errors in which individuals may add or omit details in their recollection of events.

Overconfidence Bias

The tendency to hold a subjective belief unreasonably confidently, making someone believe their ability, or the accuracy of their information, is higher than it actually is.

Confirmation Bias

The bias towards finding, interpreting, selecting, and recollecting evidence in ways that validate one's prior beliefs or notions.

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it, known also as the "I-knew-it-all-along" effect.