How much of an omission from gross income would trigger

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Problem - Loraine (a calendar year taxpayer) reported the following transactions, all of which were properly included in a timely filed return.

Gross receipts

 

$975,000

Cost of sales

 

(850,000)

Gross profit

 

$125,000

Capital gain

$40,000

 

Capital loss

(25,000)

15,000

Total income

 

$140,000

Required -

a. Presuming the absence of fraud, how much of an omission from gross income would trigger the six-year statute of limitations?

b. Would it matter if cost of sales had been inadvertently overstated by $150,000?

c. How does the situation change in the context of fraud by Loraine?

Reference no: EM132657523

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