Pentaxian
Premium
join:2008-01-23
West Milford, NJ
| Quick tax question
I was listening on the radio of what sounded like a tax evasion scheme to me, but is it?
A company physically bills some customers in 2007 for product/services shipped/rendered in 2007 yet keeps that billing off the books until 2008, essentially keeping two sets of books.
Then in 2008 they enter those the billings. Then come the end of 2008 depending on how well they're doing they in turn decide how much to move into 2009..
Is this illegal? I had to get out of my car and never heard the end of it. |
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HardwareGeek
join:2003-11-15
Brooklyn, NY | Yes you can even do that with stuff you buy for your business, but eventually you have to pay the tax on it.
You can even claim half of something in 2008 and the other half in 2009 etc. |
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Pentaxian
Premium
join:2008-01-23
West Milford, NJ
| So, why would the company have to keep two sets of books if it's legal?
The way they described it made it seem illegal.
Thinking about this.. What if a company made $100,000 in 2007 but pushed off $20,000 of that into 2008 to avoid being in a higher tax bracket?
Then in 2008 they made $120,000 but pushed off $40,000 to avoid being in an even higher tax bracket.
Then business slumps off in 2009 and they report all of their earnings, say, $80,000..
Did they evade taxes? I think the answer is yes. The tax rate is higher for higher amounts earned, right? The more you make, the more they take? |
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HardwareGeek
join:2003-11-15
Brooklyn, NY
| reply to Pentaxian
Well you have the book where you have all your revenue listed even if you haven't cashed the check/s you have recieved.
And you have your book where all your deposited revenue is listed. (This is what you will be taxed on.)
I know companies who don't deposit any payments they receive after October 31st and they do a their taxes before the 1st of January and figure out what tax bracket they will be in if they deposit the money and if they should wait until after the 1st of January to deposit, because then instead of it being prior year revenue its new year revenue.
I hope I made sense.
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Email/MSN: Michael at hardwaregeeks.comAIM: MikeR35292 |
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Pentaxian
Premium
join:2008-01-23
West Milford, NJ
| I understand what you're saying..
I just wondered how it effected your costs of doing business though.
Assume I bought something in 2007 and sold it in 2007 but don't report the sale until 2008. Wouldn't that artificially inflate my operating costs for 2007? In turn reducing my profits made and taxes paid for that year? |
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HardwareGeek
join:2003-11-15
Brooklyn, NY
| I get what your saying lol, i personally never used this tactic when filing my business taxes I just know it can be done.
What I have done is, break down the deduction I receive each year on equipment I buy. So that I can deduct 50% of it this year and 50% of it next year.
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Email/MSN: Michael at hardwaregeeks.comAIM: MikeR35292 |
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