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# Question: Jim a retail merchant reported the following on his 2010 return: sales 200000 cost of goods sold 80000 gross profit 120000 what amount must...

4. The Hightown Council refused to increase the town budget.
Robert Read was laid off from work on August 4, 2010.
Earlier in the year he had been temporarily disabled from
At year-end Robert Read and his wife have the following
sources of income

Question: - Jim a retail merchant reported the following on his 2010 return: sales 200000 cost of goods sold 80000 gross profit 120000 what amount must be omitted from income for the six year statute of limitations apply a. 30000 b. 20000 c. more than 50000 d. more than 30000 Solution:- Computation of the omitted from income for the six year statute of limitations apply A six Year statute of limitations applies if gross income omitted from the return exceeds 25% of the gross income reported on the return. For this purpose gross income of a business includes total gross receipts before subtracting cost of goods sold and deductions Thus a six year statute of limitations will apply to Jim if he omitted from gross income an amount in excess of 200,000*0.25 = \$50,000 Hence the answer is D coz 50000 is more than \$30,000

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