For the Following Tax Returns, Identify the Method the IRS

question 31

Essay

For the following tax returns, identify the method the IRS likely used to select the return for audit.
a. Dan made a mistake in adding his income on his tax return.
b. Juanita failed to report her salary from her 2^nd job on her tax return.
c. Michael and Venita deducted a relatively large amount of travel expenses on their tax return for their business. The travel expense is large relative to other taxpayers in similar businesses with similar levels of income.
d. Paul and Melissa recently went through a very nasty divorce. One of the issues was Paul's less than forthright accounting of his income in determining the appropriate level of alimony.

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Definitions:

Meaning

The significance or interpretation of a word, phrase, sentence, or symbol.

Bonding

The process of creating a secure financial guarantee, typically via a bond, that protects against losses from failure to meet contractual obligations or perform duties.

Fidelity Bond

A form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals, often employees.

Surety Bond

A three-party agreement where the surety guarantees to the obligee that the principal will fulfill an obligation or perform as agreed.