For the 2018 Tax Returns, Indicate When the Statute of Limitation

question 9

Essay

For the 2018 tax returns, indicate when the statute of limitation expires and why.
a. Simon filed his tax return on April 10, 2019.
b. Billy and Barbara filed their tax returns late on December 1, 2019.
c. Pearson earns a living through various illegal activities. He filed his tax return on March 14, 2019 but did not report his illegal income on his tax return.
d. Luther filed his tax return on July 17, 2019 but has accidentally underreported his gross income by 20%.

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Definitions:

Prepaid Expenses

Funds disbursed before receiving goods or services, documented as assets until they are utilized or consumed.

Expense Recognition Principle

An accounting principle that matches expenses with revenues in the period in which they're incurred to produce those revenues.

Service

The action of helping or doing work for someone, often refers to non-tangible products offered by businesses.

T-account

The basic form of an account.