Understanding and Working with Tax Law

Order instructions:
Understanding the US IRC applicable to individual income taxes is important when working with taxation. Answer the following questions from the textbook to express this understanding: Statute of Limitations: What purpose is served by a statute of limitations? How is it relevant in the case of tax controversies? Probability of Audit: Assess the probability of an audit in each of the following independent situations: •As a result of a jury trial, Linda was awarded $3.5 million because of job discrimination. The award included $3 million for punitive damages. •Mel operates a combination check-cashing service and pawnshop. •Jayden, a self-employed trial lawyer, routinely files a Schedule C (Form 1040) that, due to large deductions, reports little (if any) profit from his practice. •Bernard is the head server at an upscale restaurant and recently paid $1.8 million for a residence in an exclusive gated community.