IRS Notices and Prior-Return Review
Learn the decision pattern the exam can test, then apply it to a realistic taxpayer fact pattern.
What changes the answer?
A notice is an allegation or request, not automatically the correct tax result; reconcile it to the return and source records.
A tax-practice scenario
A new client brings a balance-due notice and last year's return. Trace the notice code, proposed change, response date, and current-year carryovers.
Identify the taxpayer, entity, transaction, and tax period first. Write the controlling tests in order, apply only the relevant facts, and keep the reporting result separate from any planning recommendation.
Do not take this shortcut.
Starting a new return without reading prior depreciation, capital-loss, credit, or basis schedules.
Turn the rule into recall.
Begin every inherited engagement with a prior-return continuity checklist and a notice deadline log.
- ExplainState the governing distinction without notes.
- ApplyChange one fact in the scenario and predict the new result.
- RetrieveAnswer an unseen question, then review every option.
Official source and scope
This lesson follows the current PSI content outline and uses the IRS reference below for the underlying tax or practice framework. Always confirm current forms, instructions, thresholds, and effective dates before advising a taxpayer.