Harold Thompson, a self-employed individual, had income transactions for 2014 (duly reported on his return filed in April 2015) as follows:
- Gross receipts: $400,000
- Less cost of goods sold and deductions : $320,000
- Net business income: $80,000
- Capital gains: $36,000
- Gross income 0 $116,000
In November 2015, Thompson discovers that he had inadvertently omitted some income on his 2014 return and retains Mann, CPA, to determine his position under the statute of limitations. Mann should advise Thompson that the six-year statute of limitations would apply to his 2014 return only if he omitted from gross income an amount in excess of
a. $20,000
b. $29,000
c. $100,000
d. $109,000
Answer: D
CPA Exam
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