Problem 1: In connection with facilitating the function of the IRS in the administration of the tax laws, comment on the utility of the following:
a. An increase in the amount of the standard deduction.
b. Dollar and percentage limitations on the deduction of personal casualty losses.
c. Power to make adjustments to properly reflect a taxpayerâ??s income.
d. Availability of interest and penalties for taxpayer noncompliance.
e. Arm's length standard.
Problem 2: Tom, a calendar year taxpayer, filed his 2003 Federal income tax return on April 1, 2004. In 2008 the IRS audits this return and assesses an income tax deficiency against Tom. On the grounds that the statute of limitations has run, Tom disputes the assessment. Is Tom correct? Why?
Contrast the tax consequences resulting from the following filing status situations:
a. Married filing jointly versus married filing separately.
b. Married filing separately versus single filing separately.
c. Married filing separately versus abandoned spouse status.