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Posted by joetaxpayer on July 31, 2007, 3:38 pm
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>> One of my colleague was mentioning that he rented his
>> property and did not report the rental income since he was
>> barely breaking even. According to him there is no direct
>> way the IRS will be able to find out the actual rentals
>> received.
>>
>> Is it right? If that is the case everyone will do it, right?
> Unless the tenant reports it, which is unlikely unless the
> tenant is a business, it's hard to see how they'd find out
> unless they audited him and started going through his bank
> account statements. Maybe not even then if he doesn't
> deposit rent checks and cashes them instead.
There are some state where a renter is allowed to take a
deduction for their rent, up to some limit. It wouldn't take
a supercomputer to discover a rent deduction at 123 main
street, with no corresponding schedule E along with claimed
rental income. This scenario hints at both 'wrong' and
'stupid', not sure which is worse.
JOE
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Posted by Mike on July 29, 2007, 10:11 pm
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> One of my colleague was mentioning that he rented his
> property and did not report the rental income since he was
> barely breaking even. According to him there is no direct
> way the IRS will be able to find out the actual rentals
> received.
>
> Is it right? If that is the case everyone will do it, right?
No
Mike
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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Posted by rlsusenet@NOSPAMPUHLEEZschnapp on July 29, 2007, 10:11 pm
Please log in for more thread options Alex M wrote:
> One of my colleague was mentioning that he rented his
> property and did not report the rental income since he was
> barely breaking even. According to him there is no direct
> way the IRS will be able to find out the actual rentals
> received.
>
> Is it right? If that is the case everyone will do it, right?
What are you asking?
Are you asking whether it's "right" for your colleague to
not report rental activity? It's neither ethical nor legal.
Are you asking whether your colleague is likely to get
caught? I'm guessing the answer is no. Your colleague
*probably* won't get caught at it. Your colleague might get
caught if the state government looks at the property tax
records and sees the properties owned by this person, and
somehow figures out that not all the property taxes are
showing up on Schedule A. (Of course, if Your Colleague
*IS* deducting those property taxes, the situation starts
smelling less of laziness and more of fraud.)
Or perhaps Your Colleague's tenant gets unhappy with his
landlord and files a 1099.
Or perhaps Your Colleague gets called in for one of those
random TCMP audits they're considering resurrecting.
These are fairly unlikely scenarios.
Of course, the penalties of a low probability event could
make it worth avoiding. After all, that's why most people
buy insurance.
Worrying about getting caught certainly is ONE reason that a
lot of people just do the right thing.
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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Posted by Bill Brown on July 29, 2007, 10:11 pm
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> One of my colleague was mentioning that he rented his
> property and did not report the rental income since he was
> barely breaking even. According to him there is no direct
> way the IRS will be able to find out the actual rentals
> received.
>
> Is it right? If that is the case everyone will do it, right?
Yeah, you can cheat on your taxes and if you get away it
then you've gotten away with it. You can rob banks, too, and
if you don't get caught, you've gotten away with that, too.
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by John H. Fisher on July 29, 2007, 10:11 pm
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> One of my colleague was mentioning that he rented his
> property and did not report the rental income since he was
> barely breaking even. According to him there is no direct
> way the IRS will be able to find out the actual rentals
> received.
>
> Is it right? If that is the case everyone will do it, right?
There is nothing new about people taking income under the
table. However, there are many new ways (old ones as well)
which lead to discovery of such activity at the local,
state, and federal level. Local licensing, property tax
rebates requested by the renters, etc often lead such
discovery.
In any case, your "colleague" is likely cheating him/herself
by not reporting the income/expense (including
depreciation). Often, these properties offer a tax shelter
and provide for the deduction of losses up to $25,0000 from
ones adjusted gross income. Tax avoidance is fine. Tax
evasion can lead to criminal prosecution. Advise your
friend to do what the law requires 'n', if he/she has a
conscience, perhaps he/she will sleep a little better.
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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