Unformatted text preview: come.
Choice "b" is correct. Under these facts the estimate was accurate based on information available when
the return was filed. When the exact amount is known, the difference is included in income in the year
the amount is received or the exact amount is determined.
Choice "a" is incorrect. The income must be reported despite the good-faith error in estimate.
Choice "c" is incorrect. There is no need to notify the IRS of the error.
Choice "d" is incorrect. An amended return is not filed. Stewart based the estimate on information known
at the time. CPA-02053 Type1 M/C A-D Corr Ans: D 17. CPA-02053 ARE May 95 #2 (Adapted) PM#26 R 3-01 Page 27 Browne, a self-employed taxpayer, had 2008 business net income of $100,000 prior to any expense
deduction for equipment purchases. In 2008, Browne purchased and placed into service, for business
use, office machinery (5-year MACRS property) costing $30,000. This was Browne's only 2008 capital
expenditure. Browne's business establishment was not in an economically distressed area. Browne
made a proper a...
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- Fall '10
- The Land, Taxation in the United States, Educational Development Corp, Type1 M/C, Corr Ans