Misreporting either income or expenses is a crime. The latter will get you an IRS penalty. The former will get you jail time. See Leona Helmsley about whether

Misreporting either income or expenses is a crime. The latter will get you an IRS penalty. The former will get you jail time. See Leona Helmsley about whether tax evasion is a crime. Edit: Clarification. Understating income or overstating deductible expenses, are crimes.