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Note 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
by thih9 5mo ago
Note 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]