Mr and Mrs

question 12

Multiple Choice

Mr. and Mrs. Pitt filed a joint tax return in 2011. The couple divorced in 2012. The IRS audited their 2011 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:

Operating Expenses

Costs associated with a company's main operational activities, excluding cost of goods sold, financing costs, and taxes.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in the net income or loss for that period.

Lessee's Equity Cash Flows

This refers to the cash flows that a lessee obtains which directly affect their equity, usually through operations or transactions related to leased assets.

Capital Budgeting Project

The process of planning and managing a company's long-term investments in projects and assets.