The IRS audited the Loser Corporation’s return filed two years ago. The IRS found substantial underreporting of income and is proposing to review Loser’s returns for the six prior years. Loser knows it underreported its taxable income on its timely filed tax return five years ago. It reported $ 80,000 of gross sales, $ 10,000 product returns, and $ 60,000 costs of goods sold. Its actual amounts were $ 100,000 gross sales, $ 2,000 returns, and $ 40,000 cost of goods sold. Does the IRS have the right to audit this return from five years ago?
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