Inspired by another thread on casino winnings. It got me wondering what, exactly, the IRS would do if I actually reported income from illegal activities such as drug dealing, being a hit man for the mob, etc.
Say I was a drug dealer and wanted to be able to spend my illegal gains without worrying about the gummint slapping me in jail like they did to Scarface Al back in the day. Say, with my meticulous record keeping, I know that for last year I made a profit of $600,000. I proceed to declare such on my 1040. Of course, I have no documentation on this, no W-2, no 1099, no hand receipts.
OK, now let’s assume this does trigger an audit. I show the examiner my logs of all transactions: ten kilos of blow sold to the Purple Gang, for x dollars, cost was x dollars from purchase of said blow from Columbian supplier Carlos X, less car usage at x cents per mile to deliver to the meeting place, and so on. Let’s assume the examiner accepts all of my deductions as allowable and accepts my figures on net profit. Also, I’ve made quarterly deposits to the IRS as required by the self employed, so I’m OK there.
So I’m square with the IRS as far as my taxes. Are we done?
I have a feeling that there is gonna be more to this story, like them giving me a handshake and a big “Thank You” and then introducing me to these nice gentlemen from the DEA.
Can they/will they do this?