Also known as: tax deficiencies · notice of deficiency · deficiency
Written by attorneys · grounded in primary & secondary sources — see below
The amount by which the tax properly due exceeds the sum of the amount of tax shown on a taxpayer's return.
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Theresa Tucker defaulted on her mortgage. The foreclosure sale brought less than the debt owed. The resulting shortfall created a tax deficiency when the IRS later assessed her unpaid income taxes on the canceled debt. The mortgagee obtained a deficiency judgment under state law to recover the balance.
Tanner Thompson contracted to buy equipment that arrived with defects. The loss in value from the seller's deficient performance created a tax deficiency when the IRS disallowed part of Tanner's depreciation deductions. He paid the resulting deficiency plus interest after the correct lower basis was applied.
Tamara Tan caused a car accident while experiencing a mental deficiency. The court held her to the reasonable person standard. Her resulting tort liability produced a tax deficiency after the IRS disallowed an improper deduction and assessed the correct additional tax due.
Tara Tran bought identified goods that partially deteriorated before risk passed. She accepted the goods with an allowance from the contract price for the deficiency in quantity. The reduced basis later created a tax deficiency when the IRS adjusted her cost basis on resale.
Talia Torres died leaving insufficient exempt property for her surviving spouse. The spouse claimed other estate assets to make up the deficiency up to the statutory limit. The estate's tax deficiency increased because the additional assets raised the taxable estate value.
Tobias Thomas signed a letter referencing an unsigned memo that together formed a sufficient memorandum. The memo's missing price term created a tax deficiency when the IRS later challenged the contract's validity for lack of a complete writing.
A tax deficiency equals the difference between the tax properly due and the amount shown on the return. The calculation begins with the correct tax liability and subtracts any amount already reported and paid.
Supporting sources
Yes. By definition the deficiency represents the shortfall between the correct tax and the reported tax, so the taxpayer must pay the difference plus any interest or penalties.
Supporting sources
…of a threat to the health or life of the mother, or that the child "may be born with incapacitating physical deformity or mental deficiency," or that a pregnancy "resulting from legally established statutory or forcible rape or incest may constitute a threat to the mental or physical health of the patient," two other physicians…