Re: Would the IRS ever audit a cash-based business with no traceable income??

On Nov 26, 1:56 pm, "twice.redee...@xxxxxxxxx"
<twice.redee...@xxxxxxxxx> wrote:
On Nov 26, 1:08 pm, "Paul Thomas, CPA" <paulthomascp...@xxxxxxxxxxxxx>
wrote:





"Kirby M. Wilson" <kir...@xxxxxxxxx> wrote

The old "lifestyle" audit. But if he didn't deposit those
nickels and dimes in a bank and instead spent the
cash on women and drugs, who would know?

His wife's mother.

I suppose the IRS could total up the vending
machines and make estimates but still ......

They'd go by purchases of products.

These machines are located somewhere, and that somewhere usually requires
rents to offset the utilities of powering the machine. He'd be better off
reporting as accurately as he can instead of waiting to piss-off someone who
had a machine at their place, who decides to squeal on him for the reward.

Now you've got a disgruntled business owner telling the IRS that you had
200+ people buying $1 sodas from the machine that used to be at their
business.

Now whatcha gonna do.

1) You haven't filed a return for that activity.
2) You don't have a business license.
3) You don't have any records or receipts.

Making a mistake in your math isn't the same as fraud.

First off, these are not vending machines. I do vending out of a
concession trailer during May thru Sept on Saturdays to supplement my
day job. I bring in approx 16K gross during that time from the events,
all cash. The beauty of this business is that the product is Hawaiian
Shave Ice, so net profit is 95% of gross as far as cost of goods. Just
ice and syrup, and the ices sell for $3.00 - $3.50 ea and ice is free
and cup, spoon, napkin and syrup are only about 10 cents per serving.

So I have business income I want to reduce. I purchased the trailer
for $6600.00, air conditioning for $900.00, 2 generators for $2400.00
and other items all in '07. I want to Sec 179 the trailer, air cons
and gens in '07 to reduce this business income, because we have some
other untaxed income (wife's retirement and Navy retirement with no
witholding taken out) that is going to hit us hard.

So if I am honest and I report the 16K of income I don't see how they
could ever say, "well we think you had about 26K of income", since
there is nothing to trace. I have receipts but they don't say how much
syrup was purchased, how a given amount of syrup trnaslates into a
serving, how many spoons, how many cups purchased, how much I grossed
at events. They are completedly dependent on my honesty and ethics.

Thanks,

Allen- Hide quoted text -

- Show quoted text -

By the way, do the IRS thugs monitor this board??? They could easily
get ones email and track that to a name and address and tax return.
.

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