Choice "B" is correct. Generally, the statute of limitations on assessments is three years from the later of the due date of the return or the date the return was filed (including amended returns). The IRS has up to six years to assess additional tax if the misstatement is an understatement of 25% or more of gross income. In this case, the misstatement is $500 on $20,000 of gross income, or 2.5%. Therefore, the statute of limitations for Martinsen is the general rule. In this case, the due date of the return was April 15, Year 2. Martinson filed on March 31, Year 2. Under the general rule, the IRS has until three years from April 15, Year 2 (or, April 15, Year 5) to assess additional tax.Choice "a" is incorrect. In this case, the statute of limitations on assessments is three years from the later of the due date of the return or the date the return was filed (including amended returns). March 31 is the earlier of the two dates. Choice "d" is incorrect. Please refer to the discussion for the correct choice "B". This answer choice is incorrect because it uses the earlier of the two dates and the improper number of six years as the statute of limitations. Choice "c" is incorrect. Please refer to the discussion for the correct choice "B". This answer choice is incorrect because it uses the improper number of six years as the statute of limitations.