Question: A recent study of IRS audits showed that for estates

A recent study of IRS audits showed that, for estates worth less than $5 million, about 1 out of 7 of all estate tax returns are audited, but that probability increases to 50% for estates worth over $5 million. Suppose a tax accountant has three clients who have recently filed returns for estates worth more than $5 million. What are the probabilities that:
a) All three will be audited?
b) None will be audited?
c) At least one will be audited?
d) What did you assume in calculating these probabilities?



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  • CreatedMay 14, 2015
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