Random Politics & Religion #02

Precisely.

We're not talking the five-six-seven+ figure sums here.

We're talking about maybe $1,000 over the course of a year in petty cash.

Which is nothing and easily kept in cash.

But it's enough to pay for your gas all year, which is really important to a small-time food vendor or something similar.

Isn't legal evasion a bit of an oxymoron?

If you do it wrong. But I am thinking you are not keeping up with the conversation and the entire topic is lost on you.

Who knew a topic on taxes would make pages fly by this fast!

It would be if our tax code wasn't so convoluted and bloated there was a mega-industry that revolved merely around wading through it and making it work.

In that vein, it's good to see Liz Warren introducing legislation to deal with that recently.

So?

They had losses in previous years they couldn't use in the year of the loss, so they used it in the year they had income. How is that bad again?

Also, they used the depreciation methods the Treasury Department enforces on them, which is an accelerated method of depreciation when most of the businesses (for business purposes) use a straight line method. How is complying with the law bad again?

What that article didn't tell you, what the GAO report does tell you, is that they (the GAO) used the legal definition of a "corporation" for tax purposes, meaning that S-Corps (corporations who pass the income to the owners, which is taxed at the individual's tax rate) and LLC/LLP/LLLP/LLLCs (which can be structured either as a partnership or corporation depending on the state in question and how the owners wish it, and even then, they are structured as either an S-Corp or partnership, both of which passes the income to the individual) are included in that figure.

If they were honest in their report, they would only look at C-Corps. But why should they be honest when telling the lie sells more papers?

Long story short: That GAO report is misleading, and that article furthers the misleading.

Lol.
Probably the worst insult ever thrown around in this subsection!

Speaking in admin-mode, I love it. Lots of actual discussion, that isn't breaking along the usual party lines, with clear facts. It's the best this section has been in months.

I agree, Mr. Cruz.

You mean you're only allowed to have one safe and it has to be in your business and all the employees must have a key?

I am really out of touch, all these new laws I knew nothing about..


I said the opposite of this..

The IRS can ask for all the Cash only receipts with no names on them all they like. I really don't see the problem here...

You'd have to ask one of those Illegal Immigrants that have a legal drivers license.

What you are suggesting is counter to actual business practices. I do not know of one business that runs a cash-only, no bank account method. I mean, there's absolutely no growth in that.

I have dealt with a couple of audits in my time, and even then, you had to substantiate even cash only transactions.

Everything has a receipt. Even if you pay in cash you need a receipt or you don't get the deduction.

The legal definition is that it only refers to the illegal variety but many media outlets and posters on this site tend to think any method is "evasion".

The infamous double Irish with a dutch sandwich method

https://en.wikipedia.org/wiki/Double_Irish_arrangement

Mostly illegal now but others have sprung up to take it's place.

That system was legal during the time it was used, no laws were broken and massive amounts of money was saved. Apple was able to keep it's averaged annual tax obligation in the mid single digits using a combination of such methods. The accounting is so complex that it requires a large dedicated accounting stuff to track it all and keep it legal, something that only makes sense when a business is dealing with tens of millions of USD.

Okay, fair enough.

That said, once it's passed onto owners and partners...what then?

Still sounds like it's got a lot of potential for abuse and things slipping through the cracks.

Not really. If we go back to the example of actually selling a 7k computer for 250USD (or whatever the hell it was) and claiming a loss, simply for the point of reducing tax burden, you may be reducing the taxes you pay, but you aren't keeping your money.

If neither of those conditions is true (the purchase or sale price), and they are attempting to reduce the tax burden due, well, that's tax fraud. Which is something else entirely.

I do, several. They aren't the types to need the services of an accountant nor are they even able to afford that. Most are just one person being self employed and doing service work. They don't keep separate business and personal checking accounts and tend to pay most expenses in cash. This is really small stuff here, which is what we were talking about. There isn't payroll or monthly expense reports, hell they probably don't even file the correct tax documentation, but because its' so small nobody cares.

So if Rooks writes a lengthy PM, is it now a Cruz missive?

They pay taxes on that income. With the sole exception of other, similar-classed business losses, they pay the taxes on that income.

You can argue other deductions and other credits, but that's what AMT was made for. AMT kills nearly all deductions and forces those who fall under that tax to pay the minimum* of 28% of their income.

*Minimum of ordinary income. Capital gains AMT is 20%.

That income is passed through on a form called a K-1. IRS specifically checks those K-1s to make sure they are correct and all partners/owners are attributed their portion of income based by their ownership.

Anything you may think could slip through the cracks, IRS already looked into and fixed it. There aren't as many loopholes as you think they are, and those you think are loopholes aren't really loopholes to begin with.

Fair enough. No potential for growth either, so it doesn't interest me.

Even part-time things, like teaching music lessons or tutoring in an academic subject where there's no physical good being sold and little proof that any transaction took place at all...

Again. Never said or implied a business does that. The ideal thing to do is deposit 4k of your 5k earnings for the month. That thousand dollars never existed and there is zero way to ever have it traced. Do you understand this concept at all? The numbers mean little, it just has to look on the up and up. The better it looks the more can be hidden. People get caught when they get greedy.


We crossed over that line of debate. I have been talking about businesses not reporting taxable income. Sorry, if you missed the switch over.

But that's precisely what we (or at least, I) have been saying all along.

Just because big corporations have to get creative and do the Accounting Limbo through the world of corporate tax law doesn't mean small-time businesses or private citizens don't engage in nominal amounts of tax evasion, even completely unwittingly at times.

Also to note, it helps when you have a person who's knowledge of said business actually posts here.

No speculation, just information, and retorts using facts.

I know Ramy and Sav aren't attacking me or my ex-profession (mostly). They are just referring to what they heard or thought my ex-profession does.

What did you think we were talking about when we said "cash only"? That doesn't just refer to them only accepting payment in cash, but also to them using cash only for expenses and payout. They use cash only because they don't make enough to justify automated methods.

I dealt with both sides though, large multi-nationals and small mom/pops.

What Savael is saying are smaller than even the small mom/pop businesses. Those are the type of businesses that sell from their garage and can be considered to be a hobby in most cases.

Actual businesses, not hobbies.

But still, technically, income/expenditures that taxes should be paid upon.

But they're not!

Voila!

/sigh..
My only point on that was that it could be done. You can go back and see that I said it was stupid, not advisable, and would more than likely get flagged.

I really don't understand why I need to defend my position on this anymore when we have all agreed that is possible to do, but really damn stupid!

So we're all on board with the cruz tax plan?

That's the summary from my 10 seconds of skiming.

Only if, by that, you mean that Rooks has put out his own tax plan and you're using our newly-minted nickname for him.