Adventures with lyrical - buying a business

Cathan said:

Not sure I"d state that over the internet here...

Say some tard on the board doesn"t like you and has the ability to figure out personal information about you. If they read this thread I bet they could dig up a name.

Then they send your info in to the IRS dropping a dime. I don"t know how often the IRS audits people but years ago my mom, sister and I lived with my sister"s dad (all 4 of us). Sister"s dad ran his own construction business and mom knew he was fucking over the IRS. When they split she took his records and sent that shit to the IRS. He got audited and the IRS put it to his ass.

Do what you do but if I were you I"d edit that info out of my posts. Some of the people on this board are unstable at best and others are just looking to fuck with people.

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Assuming you are directing this post at me, I don"t care about unstable personalities. We have a valid argument for every expense, and I never said I took cash out, I"ve said I"ve had owners claim to me that they take out in excess of one million in cash tax free on an annual basis. I wasn"t the one doing it.

Really the only thing I care about unstable personality wise is the guy that could track down my contracts and tell them I was breaking an NDA, but I"ve sanitized any NDA breaking stuff at the suggestion of Tuco.

Grooverider said:

Bragging about tax evasion on the internet = very very stupid.

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At no point did I say I evaded taxes. The Mercedes might be borderline, but what could the IRS do even for our a/v setup? The local place we bought our a/v stuff has corporations and small businesses that do this all the time, buy higher end stuff, and expense it 100%. And so I"m not exaggerating and am clear on it, the system had an MSRP of 20k, we bought for 10k, and expensed 25% of it for business use (meetings).

If the IRS wants to come after me for legal deductions (cars, cell phones, office expense, meals and entertainment), let them. The reality is there audit rate is so low, penalties so low, and there are much bigger fish to fry.

Grooverider said:

Must be very different to here in England. If you fuck around and try to actively hide money (hide money in walls, make fake invoices for wedding dresses and claim they are uniforms) here you go to big boy jail, do not pass go, do not collect 200 dollars.

Shit like buying a home cinema and claiming it on the business would not just cause a huge fine, but would mean a massive investigation into the last 5 years of your tax filings.

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Its pretty commonplace in the U.S. As a matter of fact, I don"t know of one business owner with totally clean books, everyone I know hides it, and hell, will tell you how the hide it over a few drinks. The IRS has the rep of not even looking at people"s books for people that have been in business for 30-40 years, and like I said, the guy who owned the business before me hid millions over 50 years and never had an audit the whole time. I"m not going to try to hide 200-300k a year, I will take every deduction I can though.

There"s a yin-yang to it. I"m young and may want other loans, and the first thing the banks do is look at claimed income. The guys that show a loss five years in a row but have the walls of their homes lined with cash would have a hard time getting a loan if another big opportunity came their way. And then there"s the whole issue of resale value, a bar owner I know (through a friend who is a busines broker and didn"t state the company name) said that the guy wanted 3.5 million for a bar that didn"t show a profit. Meanwhile, he was taking out one million a year from the registers of his club.

If there"s a legal deduction or grey area, I"ll be in it, but I"ll never get as bad as some of these guys I know, I like to sleep at night. I"m not going to be that guy that pulls out huge amounts of cash because at some point you can"t hide it (how you hide a million bucks I don"t know), or have vendors falsify invoices like a wing on my house (as parts and labor) or wedding dresses as uniforms. I"ve never asked a vendor to falsify an invoice, and I never will.

OneofOne said:

Worth their time? Probably not. Believe you me, they do go after stupidly small fish though. We had to go as far as filing with the tax court for them to back off trying to (wrongly) fuck with a tiny business owner (about 75k gross?) over about $8k.

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How do they justify their labor on that? And then they ignore the businesses that have two-three million in revenue, from my experience those are the biggest cheaters (even on a % of sales its way higher). I don"t know anyone at this level thats been audited.

To be honest, alot of these small businesses get clipped because they either don"t file a tax return, or they take cash from a customer, put it in the bank and don"t report it on their taxes (duh). I"ve only seen two business owners get clipped, and its for those reasons.

The only thing that would raise a red flag is my high amount of charitable contributions, we give 20-30k away per year either through the corporation and personal combined (the amount changes depending on who would get the highest tax benefit). So we"ve started getting giving statements from the non-profits to show that these are legit donations, and filing them with our tax returns.

Radmonovich said:

The IRS wont give 2 shits about the Mercedes
. If you have your taxes done by a competent certified person your chance of an audit goes down drastically, and it was probably done correctly any way. Preparers don"t want to get caught for fraud/stupidity because then the IRS looks at all returns they prepared. Hello audited and unhappy clients.

The IRS assigns a "dif" score to every return based on industrythe percentages, which determines your audit chance. 20k charity wont get questioned unless you throw more than some irs deemed rate as a percent of gross income.

Easiest way to get fucked is if you don"t claim all income reported by 1099, or miss somethinfh computers can match. Then their computer sends an automatic letter out and the can of worms has been ope ed. Depending on how busy the local IRS office is and how much of a d-bag (money hid) they assume win your original filing they hedge their bet/look at risk reward.

Currently they are focusing on international accounts. Don"t lie to you accountant when they ask you if you have foreign bank accounts because the penalties are huge is you"ve hid money over seas.

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I"m pretty sure I give away an abnormally high amount of charitable deductions in my industry, but the owner before me believed that "paying it forward" always brought him more business later. He always gave away a ton.