Loraine, a calendar year taxpayer, reported the following transactions, all of which were properly included in a timely return.
|
Gross receipts |
|
$ 975,000 |
|
Less: Cost of sales |
|
(850,000) |
|
Gross profit |
|
$ 125,000 |
|
Capital gain |
$ 40,000 |
|
|
Less: Capital loss |
(25,000) |
15,000 |
|
Total income |
|
$ 140,000 |
a. Presuming the absence of fraud, how much of an omission from gross income is required before the six year statute of limitations applies?
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?