Thomas received $30,000 in a legal settlement in 2018. The tax treatment of the item is not certain. Thomas’s research results were ambiguous and he is not sure if the income is taxable. Because some doubt remained and because he did not think he would be audited, Thomas decided the income was not taxable and did not include it on his tax return filed on April 14, 2019. His gross income, excluding the $30,000 in question, was $50,000.
a. When does the statute of limitations expire for Thomas’s 2018 tax return?
b. Would your answer change if the IRS can prove fraud?