ed <edcosoft[at]sbcglobal.net> wrote:
- quote -

The idea is that a renters credit would smoke out who
receives the rental income, not that the credit would be
sufficient to make people not want to cheat.

Stu

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<ChenangoBusinessServi...[at]hotmail.com> wrote:

- quote -

ANOTHER tax credit to appease a minority. RE already has
the best tax credit available with depreciation, Schedule E
expenses, and more room for cheating than on a Schedul C or
A. PLUS the investment keeps up with inflation and has a
high cash yeild. I don't think we have to pamper (payoff
with a credit) anyone (them) honest. They'll cheat on top
of the credit (ala the Earned Income Credit to entice people
to go out an earn money).

ed

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On Jul 28, 1:28 am, "Alex M" <lall...[at]yahoomail.com> wrote:

- quote -

You have to be kidding? Of course he's wrong. Besides that
there's clearly something wrong with his ethics. Not much
difference here and what those guys did at Enron....just a
matter of magnitude.

Dick Adams mentioned the guy who got 3 years. To show you
how seriously the IRS takes provable fraud, one guy
overreported expenses by a mere $1000 and got 6 months.
Another underreported income by about the same amount. He
too got 6 months.

The biggest issue here is his lack of integrity.

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"Alex M" <lallavj[at]yahoomail.com> wrote:

- quote -

This really isn't a forum on how to commit tax fraud.
(I think intentionally not reporting rental income could be
just that)

Also, I think that somewhere in the past week or so, I saw
that the IRS put out something on just this topic -
underreporting of rental income. So, its safe to say that
the IRS is cognizant of this scam of yours. That being the
case, expect more vigilance from the IRS in this area.

How lucky are you at playing the IRS audit lottery?

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

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It's a crying shame there is so much abuse on this. A simple
Tax credit for renters would force out billions in
unreported income.

Why are such simple solutions avoided??

Nichols
CBS

Moderator:
When logic or simplicity coincide with tax legislation.
it means Congress was asleep at the swith.

Or better put: When someon says "Tax Simplification", I
reach under my pillow and click off the safety catch on
my gun.

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- quote -

There are some state where a renter is allowed to take a
deduction for their rent, up to some limit. It wouldn't take
a supercomputer to discover a rent deduction at 123 main
street, with no corresponding schedule E along with claimed
rental income. This scenario hints at both 'wrong' and
'stupid', not sure which is worse.

JOE

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"Alex M" <lall...[at]yahoomail.com> wrote:

- quote -

We have an extensive "underground economy" in cash only
where no one reports the income and no one reports the
expenses. If properly taxed we probably woundn't have a
deficit, so these "tax cheats" are costing you and me MONEY.

We could stop a considerable amount of it with the FAIR TAX
where the tax is based on consumption rather than income,
let alone the accounting savings. The regulation of State
Sale Taxes is much more efficient than our FET so once the
rate is set the system should lower taxes while increasing
tax income due to efficiency and tapping the underground
economy. People get hostile and nit-pic at FAIR TAX
features without considering the tremendous advantages it
offers overall. The objections are all hollow when you look
at them objectively and in relation to the present mess we
have. Our tax advisory boards didn't recommend it because
they were directed to find a solution WITHOUT any kind of
consumption tax, thereby ruling out any meaningfull insight
from that quarter.

So, your friend would be taxed under FAIR TAX when he spends
the rent to buy grocieries, even though the tenant doesn't
report the rental income as a taxable "purchase" (which he
should). It creates more tax income than the present system
of neither reporting anything.

ed

Moderator:
While the conjectures of the respondent may have merit,
The Charter of the newsgroup restricts tax discussions
to current tax laws and those under consideration. Is a
national consumption tax under consideration?

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"Alex M" <lall...[at]yahoomail.com> wrote:

- quote -

He is correct that currently, renters do not report rents
paid to the IRS. However, some states have rent credits and
I guess it is possible, I have no clue, that in an audit of
one of them, it could become known. Not to mention possible
rental subsisdy issues, etc.

Most of the airlines and auto manufacturers also barely
break even but I am pretty sure they file tax returns. None
of that is the point I guess except that I have many
landlords/property owner clients and a lot of them break
even or even lose money on paper, yet they own property
valued in the millions. The depreciation not taken is just
the first thing that comes to mind that could make this a
very complicated situation in the future.

If he is just renting a single-hole porta-potty I guess this
is no big deal. If he owns a 200 unit apartment complex then
maybe it is.

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"Alex M" <lall...[at]yahoomail.com> wrote:

- quote -

There is nothing new about people taking income under the
table. However, there are many new ways (old ones as well)
which lead to discovery of such activity at the local,
state, and federal level. Local licensing, property tax
rebates requested by the renters, etc often lead such
discovery.

In any case, your "colleague" is likely cheating him/herself
by not reporting the income/expense (including
depreciation). Often, these properties offer a tax shelter
and provide for the deduction of losses up to $25,0000 from
ones adjusted gross income. Tax avoidance is fine. Tax
evasion can lead to criminal prosecution. Advise your
friend to do what the law requires 'n', if he/she has a
conscience, perhaps he/she will sleep a little better.

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"Alex M" <lall...[at]yahoomail.com> wrote:

- quote -

Yeah, you can cheat on your taxes and if you get away it
then you've gotten away with it. You can rob banks, too, and
if you don't get caught, you've gotten away with that, too.

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"Alex M" <lallavj[at]yahoomail.com> wrote:

- quote -

No

Mike

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Alex M wrote:

- quote -

What are you asking?

Are you asking whether it's "right" for your colleague to
not report rental activity? It's neither ethical nor legal.

Are you asking whether your colleague is likely to get
caught? I'm guessing the answer is no. Your colleague
*probably* won't get caught at it. Your colleague might get
caught if the state government looks at the property tax
records and sees the properties owned by this person, and
somehow figures out that not all the property taxes are
showing up on Schedule A. (Of course, if Your Colleague
*IS* deducting those property taxes, the situation starts
smelling less of laziness and more of fraud.)

Or perhaps Your Colleague's tenant gets unhappy with his
landlord and files a 1099.

Or perhaps Your Colleague gets called in for one of those
random TCMP audits they're considering resurrecting.

These are fairly unlikely scenarios.

Of course, the penalties of a low probability event could
make it worth avoiding. After all, that's why most people
buy insurance.

Worrying about getting caught certainly is ONE reason that a
lot of people just do the right thing.

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- quote -

Unless the tenant reports it, which is unlikely unless the
tenant is a business, it's hard to see how they'd find out
unless they audited him and started going through his bank
account statements. Maybe not even then if he doesn't
deposit rent checks and cashes them instead.

I know casual landlords around here who don't report the
income, but don't treat the property as a business and so
don't deduct the expenses either. The extra taxable income
if they reported it all would be insignificant.

R's,
John

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"Alex M" <lall...[at]yahoomail.com> wrote:

- quote -

He is required to report the income--it's the law--he is
filing a fraudulent return when he doesn't. If that's not
good enough for him, he should consider these three factors:

1`) a perusal of his bank account, property records, or an audit would
reveal the issue. There is no statute of limitations on fraud.

2) he might benefit from filing a Schedule E--up to $25,000
in annual losses can be taken on rental property if certain
criteria are met.

3) The IRS is always looking at methods of narrowing the tax
gap (the difference between what is collected and what
should be collected) with new reporting requirements and new
software.

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"Alex M" <lallavj[at]yahoomail.com> wrote:

- quote -

Do you really need to ask about the difference between
right and wrong?

Your colleague is playing the audit-lottery where the enrty
fee is free, the winnings are minimal, and the cost of
losing can be very high.

I know of a hog farmer who got three years in the slammer
over $5,000 of unreported income - not to mention the
back taxes, the interest, the penalties, and the attorney
fees.

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"Alex M" <lallavj[at]yahoomail.com> wrote:

- quote -

Time will tell, won't it? If he's dumb enough to tell you
this, he's dumb enough to tell it to someone he's peeved,
who will tell IRS, etc. That's one way they could find out.

What's really stupid is that if he's barely breaking even in
cash flow he probably has a loss for tax purposes. I
wouldn't tell him.

--
Phil Marti
Clarksburg, MD

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One of my colleague was mentioning that he rented his
property and did not report the rental income since he was
barely breaking even. According to him there is no direct
way the IRS will be able to find out the actual rentals
received.

Is it right? If that is the case everyone will do it, right?

Thanks
LV

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