Summary: Each year, taxpayers dispute tax adjustments identified by the Internal Revenue Service (IRS) in audits. As of September 1992, about 12,000 disputed issues in IRS' database with $99 billion in proposed income adjustments were waiting to be resolved by the Office of Appeals. GAO found that the following 14 tax code sections accounted for about 45 percent of those issues and 57 percent of the proposed adjusted amounts: trade or business expense; gross income defined; depreciation; allocation of income and deductions among taxpayers; taxable year of deduction; capital expenditures; bad debts; deductions for losses; definition of gross estate; taxable year of inclusion; net operating losses; taxes of foreign countries and U.S. possessions; last-in, first-out inventories; and taxability of corporations on distribution. Data also show that issues related to these 14 code sections accounted for an average of 44 percent of all issues resolved or closed by Appeals during fiscal years 1991 and 1992, 52 percent of the proposed adjustment amounts, and 59 percent of the proposed adjustment amounts sustained by Appeals.
