Linney Corporation, which uses a June 30 fiscal year end for tax purposes, requested an automatic six-month extension of time to file its return for FYE June 30, 2019. It filed the return on February 8, 2020. The revenue agent who examined the return suspects that Linney may have substantially underreported income for the year. Which of the following is false?
A. If the underreporting of income constitutes fraud, there is no statute of limitations, and the IRS can assess additional tax at any time.
B. If the amount of unreported income is less than 25% of the gross income reported on the return and the return is not fraudulent, the IRS has until December 31, 2025, to assess additional tax.
C. If the amount of unreported income exceeds 25% of the gross income reported on the return, the IRS has until February 8, 2025, to assess additional tax.
D. None of the above is false.
Answer: B
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