5 ms·
No, it doesn't have to be "reasonable". Its only illegal if it is used to cover up some other illegal thing. For example giving huge discounts below cost only
by andix 5mo ago
No, it doesn't have to be "reasonable". Its only illegal if it is used to cover up some other illegal thing.
For example giving huge discounts below cost only to family members, which is more or less like paying them money without paying taxes for it.
- thih9 5mo agoNote that we’re talking about two companies exchanging services. When two companies undervalue the services that they offer to each other, they pay lower taxes. This is the illegal part.
- tstenner 5mo agoIf the expense is tax deductable, it mostly doesn't matter whether you have $10 earnings vs $10 business expenses or $10K.
- deleted 5mo ago[deleted]
- thih9 5mo agoGood luck explaining that to the IRS.
- gamblor956 5mo agoThe IRS would be fine worth it if taxable income is unchanged. Businesses are taxed on their net income, not get gross.
- thih9 5mo agoYou mean they are fine with the things they won’t notice? Perhaps that is true.
- gamblor956 5mo agoNo, depending on your accounting method the transaction we're discussing may be disregarded, so the net economic position of the taxpayers is no different. As a result the IRS is generally indifferent...so long as you maintain that method of accounting for future similar transactions.
- deleted 5mo ago[deleted]
- Flundstrom2 5mo agoIt might be legal in YOUR jurisdiction, but at least in the jurisdiction I'm in, it is not - AFAIK - legal to neither underwrite or overwrite costs on the sole purpose of avoiding tax or grooming the pig.
- andix 5mo ago> on the sole purpose of avoiding tax or grooming the pig Exactly. But it doesn't have to be used in this way.