Kant & Cann, Inc. is a calendar year consulting firm which keeps its books on the cash method. On its year 03 return, filed 3/15/04, the corporation erroneously included in income the amount realized on a project completed in Dec. year 03. KC received payment in Jan. year 04. On 5/1/07 the IRS began auditing 04 tax year return which was filed 3/15/05. Parties sign closing agreement for 04 tax year on 4/15/08, which included the KC agreeing to recognize the disputed income in year 04. SOL has expired to seek a refund for year 03.

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