Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns

Question

Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income, causing the joint return year 2 tax liability to be understated by $6,100 and Crewella’s year 3 separate return tax liability to be understated by $7,250. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank - be certain to enter "0" wherever required.)

a. What amount of tax can the IRS require Jasper to pay for the Dahvill’s year 2 joint return?

b. What amount of tax can the IRS require Jasper to pay for Crewella’s year 3 separate tax return?

Explanation / Answer

In Year “2”, the return was jointly filed. Hence, Jasper is required to pay for Dahvill’s tax due of $6100.

Note:

As they both separated legally and got divorced, Jasper has the option of claiming relief by filing form 8857. It is clear from the case that tax default is only inrespect of income reported by Dahvill. These reliefs can be availed, if Jasper can establish that he is innocent and he is not aware of the under reporting of income.

Relief 1: Innocent spouse relief: (when he proves that he has no knowledge of the under reporting)

Relief 2: Separation of liability:

Relief 3: Equitable Relief:

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.