Mr and Mrs

question 21

Multiple Choice

Mr. and Mrs. Pitt filed a joint tax return in 2013. The couple divorced in 2014. The IRS audited their 2013 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:

Settlement Date

The day on which cash is received or paid.

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The conditions, including payment deadlines and interest, under which credit is extended by a seller to a buyer.

Exchange Rate

The price of one country's currency expressed in another country's currency.