LO.5 Assess the probability of an audit in each of the following independent situations:

a. 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.

b. Mel operates a combination check-cashing service and pawnshop.

c. 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.

d. Bernard is the head server at an upscale restaurant and recently paid $1.8 million for a residence in an exclusive gated community.

e. Homer has yearly AGI of around $70,000 and always claims the standard deduction.

He works for a builder installing wallboard in new homes.

f. Gloria lost a Form 1099-DIV that she received from a corporation that paid her a dividend.

g. Cindy, a former vice president of a bank, has been charged with embezzling large sums of money.

h. Giselle is a cocktail waitress at an upscale nightclub. She has been audited several times in past years.

i. Marcus was recently assessed a large state income tax deficiency by the state of California for his utilization of an abusive tax shelter.

j. Guy, a professional gambler, recently broke up with his companion of 10 years and married her teenage daughter.