Sally Young, A CPA sole practitioner, prepares tax returns each year for approximately 100 clients. One of her clients is Jim Webber, a very successful entrepreneur. Jim has five different business ventures that he owns, all of which are organized as single-member limited liability companies. In 2016, Jim's individual tax return reflected taxable income of $150,000. The return was filed on March 20, 2017 and the $2,500 of tax due was paid. Jim's total tax liability for 2016 was $23,000. When Sally prepared Jim's return in March 2017, she signed the return and was paid a fee of $1,000. Upon audit of his return by the Internal Revenue Service in 2017, the IRS concluded that Jim's actual taxable income was $180,000. The $30,000 of additional income was due to the underreporting of $30,000 of income received in 2016. The additional tax due on this income is $10,000. [Adapted from AICPA materials] Part A : Answer the following questions with regard to the audit of Jim's return by the Internal Revenue Service. Dates should be written out fully (ex.: March 4, 2018). If there is no appropriate answer to the questions, type "None." 1. Assuming that Jim's actions were not fraudulent, what is the latest date that the IRS can notify Jim that an additional assessment is being levied for his 2016 tax return? 2. Assuming that Jim's actions were fraudulent, what is the latest date that the IRS can notify Jim that an additional assessment is being levied for his 2016 tax return? 3. Once Jim receives a 90-day letter from the IRS, which court must hear Jim's case if he does not want to pay the $10,000 assessment before the trial? 4. If Jim wishes to file an amended return in the future to obtain a refund of previous taxes paid when the return was originally filed, what is the latest date that he can file the return? Part B : The following questions pertain to Jim's underreported income of $30,000. 1. Assume that it is determined that the underreporting of the income was due to negligence. Ignoring any interest due for late payments, what is the amount of Jim's penalty? 2. Assume that it is determined that the underreporting of the income was due to fraud (civil, not criminal). Ignoring any interest due for late payments, what is the amount of Jim's penalty? 3. Assume that Jim did not file his 2016 tax return and that his total tax due for 2016 was $20,000. He pays the $20,000 six months late. Ignoring any interest due for late payments, what is the amount of Jim's penalty for failing to file his tax return? 4. Assume that Jim did file his 2016 tax return, that his total tax due for 2016 was $20,000, but he paid the $20,000 six months late. Ignoring any interest due for late payments, what is the amount of Jim's penalty for failing to pay the tax when due?