My advice to Andy is that the IRS is not barred from the assessment of additional income tax because the amount is substantial and the six-year limitation period has not been exceeded.
a) Andy should report the omission in his next tax returns and clearly explain how the inadvertent omission happened. Â The IRS normally expects Andy to keep records for 6 years for unreported taxable income, especially since the income is more than 25% of his prior gross income.
b) As the professional who prepared the tax returns for Andy, once the omission is discovered, I should advice Andy to report to the IRS. Â It is better to persuade him to self-report to lessen the penalty, instead of reporting directly to the IRS about the omission on Andy's prior tax return.
Thus, the three-year limitation period does not apply to substantial (25% and above) unreported income. Â The income must be reported to the IRS. Â Otherwise, the IRS will still find out during its matching process and impose substantial penalties.
Read more about omission of substantial gross income by a taxpayer at https://brainly.com/question/14895842
