If a Return Is Identified as Including an Unallowable Item

question 17

Multiple Choice

If a return is identified as including an unallowable item, the IRS:

• A)computes the seemingly necessary adjustment in taxes and notifies the taxpayer by mail
• B)sends a formal notice of deficiency tothe taxpayer
• C)considers the contact that it makes with a taxpayer under this circumstance tobe an examination
• D)cancels the return and asks the taxpayer tofile his return again

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Definitions:

Actual Expenses

Expenses that have been paid out or actually incurred, as opposed to budgeted or projected expenses.

Budgeted Amounts

Financial projections or plans for future income, expenditure, and cash flow over a specific period.

Segmental Accounting Report

Financial reports broken down by specific parts of a company, such as divisions or departments, to assess performance of each separately.

Departmental Accounting Report

A financial report detailing the revenues and expenses of each department within an organization, allowing for the assessment of each department's profitability.