Random Politics & Religion #02

Part of me just wants to throw out the shitstorm that is "What was the Civil War actually about?" because well we're talking about Harriet Tubman but I've had my fill of ever ephemeral states rights for the day.

/sigh..

It does matter.. Nowhere did I say anyone was doing this for a business model. The only reason this would be done is to stay out of a higher tax bracket. And I said using a computer would work but it is not ideal and would most likely toss up flags.. You are either reading into this way to much or don't have a clue on how people actually evade taxes. Which is shocking considering what you do.



lol.. This isn't what anyone was talking about.



Often would be the key word here.



Fixed would be the key word here.

It is.. Did I say anywhere it was right? Nope... Either adapt and survive or go out of business.

See you understand! I knew you could do it.

I'm probably wrong.. But I think in order for taxes to come out of your paycheck they have to be voted on and pass a body of elected officials.

You probably still paid tax on it.

Vendors have the option of either selling something for the listed price and charge sales tax on top of it (generally speaking, nearly all stores/vendors do this) or sell something with tax included in the price. If you bought a corn dog from a fair vendor for $2 and didn't pay sales tax on it, you really bought it for $1.90 and paid $.10 sales tax.

Either way, you paid tax. Or the vendor did. And I highly doubt that those vendors will not pay sales taxes, every state requires vendors to register with the state for sales taxes. I volunteer at the Kendall County Fair often and I see state agents go to vendors during the Labor Day and Christmas Fairs and ask to see their sales tax certificate they are required by law to keep on hand. They don't have it? They get shut down right there.

So, you can assume away about whatever you consider to be tax evasion, it doesn't happen nearly as often as your union rep or Hollywood tells you it does. Governments don't *** around with their revenue collections, I can guarantee you that!

I think I figured out why you guys are stuck here..


They did not pay 7k for a computer... Does this really need to be spelled out any farther?

Why would you want to do this?

7,000 for a computer what is he trying to do run Crysis at 300 fps ?

I'm sure they do pay taxes on the 2 thousand hot dogs they sold. But in reality they sold 5 thousand hot dogs. Why is this hard to understand? Cash only businesses can easily hide thousands of dollars and claim a loss on the year which gets them back thousands of dollars in tax refunds. This is business 101 here!

To pay less taxes? Are you new to the conversation?

That is why strippers don't take credit cards so they can avoid paying taxes on lap dances !

And it's why I tip in cash to food service workers, also. I mean, I feel they should report their tips, but if they want to run the risk, that's their call. In their shoes maybe I would too, dunno. I've not been in the position to have to worry about it, thankfully.

Businesses sell old assets all of the time. They don't purchase newer assets and then sell them that same year just to get out of a higher tax bracket. It doesn't make sense in an economical standpoint, and it certainly doesn't make sense in a tax standpoint.

The problem on your thinking is that you think that the value or basis of an asset remains the same from the year it was purchased. I'm afraid to tell you, it is not.

And I really don't feel like teaching tax basis to the class today.

Yes you did. You specifically stated buying assets, selling them the year they were purchased for a greater loss for a tax writeoff.

And this is Governmental Audit 101. Sure, you say you sold 2,000 hot dogs in a day, but what's this? You purchased 5,000 hot dogs yesterday? What's this? You only have 20 hot dogs left? What's this? Your trash bill only accounts for waste for 40 hot dogs? Where's the other 2,940 hot dogs remaining?

And you don't think they won't see that? It would be pretty obvious (aka raising a red flag) if your revenue is only $2,000 but your costs are $5,000 for that day, and you don't have the inventory to substantiate the additional costs.

You really think accounting is that simple that you can hide ***without people knowing? Hell, even I don't think the government is that incompetent where it would pass up obvious red flags such as your example.

Never said it makes sense, we both agreed it could be done. We both agreed it was stupid and would more than likely get flagged. I dunno what you want.


It depends on the asset and speculators and which way the wind blows.. I also never said anything stays the same.


I said it wasn't very smart but it can be done. You're missing the entire point anyways.

Umm guy ... business's don't have "tax brackets", only people do.

The tax rate for business's in the USA is about 35% but the actual rate has a huge variance depending on taxable income and how many rules, deductions and exceptions exist. This is actually where most "subsidies" exist, they exempt certain sources of income or allow special deductions to reduce the final tax obligation.

And then we go into the really weird world of multi-national corporations who frequently attribute income of one business to another and thus can move their tax home to a more favorable nation.

What you were proposing doesn't make sense at all, you would never deliberately purchase something with the intention of selling it at a loss. Any amount "saved" from tax would be smaller then the financial outlay in the first place, it would cost you more money then just paying tax.

Which bring us to something else, personal charity and other donations that the wealthy like to use. Those don't actually save them money as the donation is treated as reduction in taxable income and not as a direct reduction in tax obligation.

Just for example, successful dude, not mega wealthy but definitely an evil "one percenter".

Taxable Income: $1,000,000
Rate: 39.6 (over $413,200)
Tax Obligation: $396,000

So this guy decides to donate $250K to a charity.

Taxable Income: $750,000
Rate: 39.6 (over $413,200)
Tax Obligation: $297,000

He spent $250,000 and reduced tax obligation by $99,000. Essentially it cost him $151,000 USD.

The way the tax brackets are structured, it's impossible to "save" big money by donating to charity. The most you can accomplish is if someone expects to be straddling a tax bracket and preemptively donates a small amount that's just enough to drop them under. The savings would be very minor.

This right here is your problem. They bought 2 thousand hot dogs with their credit card and 3 thousand hot dogs with cash!
Zero record exists on that cash purchase..

See what? No record exists in the first place!

Again, the cost was only 2,000.


It has nothing to do with incompetence. It has everything to do with the phrase "Cash is KING"..

No vendor is selling them three thousand hot dogs with cash

Like, that just is not happening. Not now, not ever. Even before the rise of credit cards, you just had lines of credit with the banks.

Worst cash scenario.. 6 vendors will sell 500 for cash..

I'm fairly certain I can go to any store and buy anything I want with cash though.

And really, if you want to make points about cash-based businesses, the real winners are services, not vendors.

- Laundromats
- Taxis (though they all take cards now, but for a long time Boston at least held out)
- Bowling alley/Mini-golf/etc

No pesky inventory to track.

I don't agree that businesses actually do this, purposefully and often. Like how some people think they do.

They honestly think that a business will sell an asset they purchased for pennies on the dollar just to save....pennies on the dollar on their tax return.

Wrong. The basis of an item depreciates over time. Depending on the industry and the asset in question, it could depreciate a fixed rate over a few years or an accelerated rate for a few years, then a reduced rate for the remaining estimated life. Even then, tax basis is completely different and pretty much set in stone by the IRS.

Again, I don't want to go over the finite details of basis with the class today.

No. But there's where we get into the minor variances.

3000? No.

30-300? Maybe.

And the smaller the number, the less likely the audit, but still technically a lie about taxable income/items.

*shrug*

I'm not a tax expert, which is probably why I drive KN crazy, because I consider "legal loopholes" every bit as immoral as flat-out cheating, even if it's 100% "on the up and up." These loopholes exist for reasons, and it's ***-for-tat on Capitol Hill.

But yeah. On a micro level, that isn't worth an IRS agent's hourly or per diems to drive out and audit, it still happens.

Wrong

There's more to that than...that.

Charity donations are limited to 10% of taxable income for corporations, instead of 50% of Adjusted Gross Income for individuals. Even then, the tax savings are only attributable of their tax bracket they are currently in.

I never said they did this specific thing.

I think playing fast and loose with regulations while staying "technically legal" is *** and that there are too many loopholes in our system that were bought by the people they benefit.

Alti, you have the right idea but the order of magnitude is wrong.

You aren't going to be selling 5,000 "hotdogs" and claiming 2,000, that is gonna send up all sorts of red flags.

Instead it's going to be something like 200 "hotdogs" sold on the books but actually 250 would be sold. That is a small enough discrepancy that a cash only business with hand written paper ledgers could get away with. A thorough audit will still find out, but that's expensive and would cost the state far more money then they would ever hope to recover. This stuff happens all the time but on a very small scale. It's still illegal and someone could get into trouble over it, but it's on such a small scale that nobody is going to give a damn, they have better things to do.

Now if we want to talk about billions of USD worth of income being hidden / tax evaded, then we need to discuss organized crime and recreational drug sales. That is a pure cash business model done without any form of oversight or taxation and business disputes are settled with bullets not courts.

Nearly all of those companies still deposit that money on a daily basis.

So, still traceable for income tax purposes. And they still have to buy supplies from people, and those people generally don't take cash up front and/or not invoice said products.

Holy *** Saev and I said the same thing.

Can you give me an example so I can refute it?

Hey. They call it "money laundering."

Are those two things related? They probably are.

Naah. Coincidence...

You're not understanding that the guy that said he bought a computer for 7k, DIDN'T pay 7k for that computer.. I never said it was common or people did it often.


Not all items... Believe it or not some items appreciate over time.

I'm starting to wonder if you have ever dealt with people that run business.. Although, I guess in your defense, the business owner doesn't really need to tell his accountant the intricacies of his business.