Question: Mr and Mrs BL led a joint tax return reporting
Mr. and Mrs. BL ﬁled a joint tax return reporting $24,000 AGI. During the year, Mr. BL was extremely ill and was hospitalized for four months. Mrs. BL, desperate for funds to pay her husband’s medical bills, took a night job as a bartender. She earned approximately $7,000 in tips, none of which she reported on the return. Mr. BL had no idea his wife had gone to such lengths on his behalf. After auditing this return, the IRS notiﬁed Mr. BL that he owed a $1,100 deﬁciency plus interest because of the unreported tip income. Can he avoid liability as an innocent spouse? Explain your conclusion.
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