Christie and Billy Jointly File This Year

question 46

Essay

Christie and Billy jointly file this year. Billy intentionally omits $5,000 in gambling winnings. Christie fraudulently deducts $1,000 in business expenses. The IRS audits the return, assesses a $2,500 deficiency and begins collection efforts two years after the timely filing of the return. Christie and Billy divorced one year before the deficiency was assessed. Can Christie receive any tax relief from the full $2,500 deficiency?

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Definitions:

Budgeted Units

The quantity of products or services that a company plans to sell or produce within a specific period, as outlined in its budget.

Actual Costs

The real costs incurred in the production of goods or services, including all expenses direct and indirect.

Materials Price Variance

The difference between the actual cost of materials and the expected cost, multiplied by the amount of materials purchased.

Standard Price

A predetermined cost that companies use to value inventory and cost of goods sold, often used in budgeting and performance evaluation.