Troy's 2009 tax return is audited. The auditor determines that Troy inadvertently understated his ending inventory in

Question:

Troy's 2009 tax return is audited. The auditor determines that Troy inadvertently understated his in calculating his business income. The error creates an additional tax liability of $5,000. The IRS charges interest on the additional tax liability of $600.
Identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you identify.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...