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Posted by Mike Wellman 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?
He is correct that currently, renters do not report rents
paid to the IRS. However, some states have rent credits and
I guess it is possible, I have no clue, that in an audit of
one of them, it could become known. Not to mention possible
rental subsisdy issues, etc.
Most of the airlines and auto manufacturers also barely
break even but I am pretty sure they file tax returns. None
of that is the point I guess except that I have many
landlords/property owner clients and a lot of them break
even or even lose money on paper, yet they own property
valued in the millions. The depreciation not taken is just
the first thing that comes to mind that could make this a
very complicated situation in the future.
If he is just renting a single-hole porta-potty I guess this
is no big deal. If he owns a 200 unit apartment complex then
maybe it is.
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Posted by ed 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?
We have an extensive "underground economy" in cash only
where no one reports the income and no one reports the
expenses. If properly taxed we probably woundn't have a
deficit, so these "tax cheats" are costing you and me MONEY.
We could stop a considerable amount of it with the FAIR TAX
where the tax is based on consumption rather than income,
let alone the accounting savings. The regulation of State
Sale Taxes is much more efficient than our FET so once the
rate is set the system should lower taxes while increasing
tax income due to efficiency and tapping the underground
economy. People get hostile and nit-pic at FAIR TAX
features without considering the tremendous advantages it
offers overall. The objections are all hollow when you look
at them objectively and in relation to the present mess we
have. Our tax advisory boards didn't recommend it because
they were directed to find a solution WITHOUT any kind of
consumption tax, thereby ruling out any meaningfull insight
from that quarter.
So, your friend would be taxed under FAIR TAX when he spends
the rent to buy grocieries, even though the tenant doesn't
report the rental income as a taxable "purchase" (which he
should). It creates more tax income than the present system
of neither reporting anything.
ed
Moderator:
While the conjectures of the respondent may have merit,
The Charter of the newsgroup restricts tax discussions
to current tax laws and those under consideration. Is a
national consumption tax under consideration?
<< ------------------------------------------------------- >>
<< 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 >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by ChenangoBusinessServices@hotma on July 31, 2007, 3:38 pm
Please log in for more thread options It's a crying shame there is so much abuse on this. A simple
Tax credit for renters would force out billions in
unreported income.
Why are such simple solutions avoided??
Nichols
CBS
Moderator:
When logic or simplicity coincide with tax legislation.
it means Congress was asleep at the swith.
Or better put: When someon says "Tax Simplification", I
reach under my pillow and click off the safety catch on
my gun.
<< ------------------------------------------------------- >>
<< 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 Benjamin Yazersky CPA on August 1, 2007, 4:26 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?
This really isn't a forum on how to commit tax fraud.
(I think intentionally not reporting rental income could be
just that)
Also, I think that somewhere in the past week or so, I saw
that the IRS put out something on just this topic -
underreporting of rental income. So, its safe to say that
the IRS is cognizant of this scam of yours. That being the
case, expect more vigilance from the IRS in this area.
How lucky are you at playing the IRS audit lottery?
___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
<< ------------------------------------------------------- >>
<< 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 None on August 1, 2007, 4:26 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?
You have to be kidding? Of course he's wrong. Besides that
there's clearly something wrong with his ethics. Not much
difference here and what those guys did at Enron....just a
matter of magnitude.
Dick Adams mentioned the guy who got 3 years. To show you
how seriously the IRS takes provable fraud, one guy
overreported expenses by a mere $1000 and got 6 months.
Another underreported income by about the same amount. He
too got 6 months.
The biggest issue here is his lack of integrity.
<< ------------------------------------------------------- >>
<< 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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