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.
Answer to relevant QuestionsDifferentiate between a property tax and a transfer tax. During a ﬁeld examination of GNT’s income tax returns for 2012 and 2013, the revenue agent discovered that the treasurer had systematically omitted substantial income items and inﬂated deductions to minimize the ...Is it easier for the IRS to determine that an individual omitted an income item from a return or overstated deductions? Two years ago, Lodi Inc.'s shareholders voted to dissolve the corporation. Pursuant to the dissolution, Lodi sold all its assets, paid off its outstanding debts, and distributed $789,000 remaining cash to its shareholders in ...Mrs. LK died on February 12 and left her entire estate (including her marketable securities) to her son. After the end of the year, the son received 14 Form 1099s showing his mother’s name and Social Security number. These ...
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