I haven’t been hearing any in-person wailing - but what I’ve seen in comments on articles and such is people complaining that the sender chooses whether the transaction is tagged as being for goods and services , not the recipient. Well, if your friend is paying you back for half of the dinner bill, why would they tag that as being for “good and services”?
Seems like the Trumpers are just trying to move the goalposts, changing the question to “Are all businesses completely scrupulous in paying all their taxes?” when it ought to be “Do many businesses systematically engage in the kind of crap TrumpCo just got convicted of doing?” I suspect the answers are quite different.
Judging from your posts, you’re really not
Back To The OP
My father was a wizard with red tape and bureaucracy. When he did the taxes for the daycare center my mom owned, I have no doubt he found legal ways to pay less. I really don’t see him doing anything illegal.
Talking with my Bro, and my experiences have shown that true tax Fraud of trumpian levels is very rare.
Tax Evasion, with sometimes huge deficiencies and penalties is not.
You need to see the difference. Most large business have tax advisors, CPA’s etc, which will make sure there is no actual fraud. That doesn’t mean trying to take advantage of a very grey area loophole. If the loophole is grey and they are audited, they pay up. If they are not audited- win! And if the audit comes off with them owing millions (but not fraud)- that is confidential, but needs to be disclosed in Annual reports of course. The IRS has to keep non-fraud audit results confidential.
But no legitimate large company wants to get convicted of actual Fraud.
Smaller, sole prop businesses do try all sorts of crap, which is sometimes not grey at all. But we do not hear about “Bobs Laundromat” getting hit with fraud and the doors being padlocked- except maybe in a local paper. So, that is not rare at all.
So it shows how morally bankrupt trump is. A tax audit reaching to Fraud is very rare.
Then you are just as guilty as the big oil companies that avoid taxes through the legal depletion accounting rules that many people accuse them of using to not pay their fair share.
Except that @k9bfriender , nor his CPA, probably didn’t bribe a few dozen lawmakers to enact the specific clauses of tax law that he’s benefiting from. And it’s likely that many, possibly even most or all, of the clauses he’s benefiting from are there for legitimate reasons, and didn’t need anyone bribing the lawmakers to put them in.
I can think off the top of my head of several local businesses that were shut down because of tax fraud or evasion. One was a slightly seedy Mexican restaurant that had excellent food, and another was a strip club that was basically a cancer on the neighborhood, so I personally wasn’t sorry to see it shut down.
It doesn’t make the news unless it’s a big, as in multi-millions or even billions, deal.
Whoa. Forgetting for a minute that “not paying fair share” thing, saying that depreciation is a symbol of fraud is ridiculous. If a taxi or uber driver gets paid for bringing people from place to place, should they pay “income” tax on all fares received? Shouldn’t they be able to deduct gasoline? How about that expensive car? If it’s an income tax, don’t confuse it with a tax on all receipts. Thats nuts.
The only reason we need to use the sort of complex idea of depreciation is that the IRS doesn’t allow the taxi driver to reduce his earnings by the full cost of the car but makes him “write it off” ratably (depreciate it) over time or some other logical method.
Depletion allowance is an attempt to provide some kind of way to factor in the cost of the land/mine or whatever. Much more complicated than depreciating the cost of a machine but the idea is similar.
It’s a tax on income, not receipts.
My comment was sarcasm. It’s a common comment made about big oil companies that they have these huge federal subsidies that allow them to offset income through depletion expenses to avoid paying taxes. In my opinion, depletion expenses and asset depreciation expenses are no different, and are not the result of bribing lawmakers, just as depreciation deductibility isn’t the result of bribing lawmakers. Those who think otherwise, don’t understand accounting or even business for that matter.
Doesn’t percentage depletion lead to a write off of much more than the original cost?
No
" The rules of oil and gas accounting require that the costs incurred to find, develop, and obtain minerals and oil- and gas-producing properties must be [capitalized] Percentage depletion allows for an income tax deduction for these capitalized costs, reflecting the declining production of reserves over time."
Did you read the article?
I did. Show me where it refers to more than the cost to acquire the assets to be treated as a deduction. And BTW, I am a CPA, and while I don’t do oil and gas accounting now, I have in the past.
I give up.
Is it because you don’t read, or you don’t understand tax matters.
Companies want to pay as little in taxes as they can; that’s just money out the door without any return. So I suspect all but the very most strait-laced companies approach it as something of a game, and try to minimize their tax payments as much as they can within the law, but barely within the law. And every now and again, they may skate over that line.
The Trump Organization and most tax fraud defendants are in something of a different situation though, in that they didn’t really game it so much as ignored the laws entirely.
I more or less envision it as being very similar to the holding penalty in American football. Every single play likely has at least one instance of holding, and the offensive linemen are basically taught to hold in specific ways, but you’re only going to get flagged for it if it’s egregious.
It’s because this is the whole point of the depletion allowance. It is an ALTERNATIVE to cost deduction.
From your article:
There is no dollar limit to the deduction from income from qualified nonrenewable resources.
SMH…so the latter. that’s a poorly written phrase, if you read throughout, there are clearly limitations on the annual amount of depletion expense that can be taken in any give year, depending upon the profitability of the resource utilization. But as I quoted above and is clearly stated in the IRS regs, you are limited to a lifetime deduction related to the capitalized costs associated with the resource.
Anyone deducting more, would be considered committing tax fraud.
Another definition
Unlike cost depletion, percentage depletion is not limited to the depletable base of the property and can be deducted as long as the property generates income. Percentage depletion is not allowed for foreign oil and gas producers, domestic retailers, and domestic refiners.
What is Percentage Depletion?
Percentage depletion is one of the best tax benefits available to oil and gas investors. It is a deduction without having an actual expense to back it up. Imagine being able to reduce your current income by 15% just because the IRS said you could. That is exactly what this is. Like most things related to oil and gas accounting, calculating percentage depletion can be challenging.