Quote:
Originally Posted by PatCummings
While it might have all started with an inquiry into his gambling or horse ownership, the tax issue has nothing to do with that, and uncovered a significantly greater situation, under-reporting about $400k total in income. It really has nothing to do with racing, his betting, or anything else.
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The reason that happened was because of the large cash deposits, if those were checks, there would have been no issue. Fact is that once they audit you, they will ask for everything, both personal and your businesses and if you dont have it handy and it isnt well thought out, proving its not a hobby is almost impossible
Every year you have to have a business plan (financial statements, year in review, current year goals, what worked and what didnt, and explaining what you are doing to become profitable) and you also need a time log of the hours you have spent (need 600 hours to call it a business, i think the # is 600, but they recommend that you have 800-1000 cause they question everything)
Your right that his underreporting is what did him in, but the large CASH deposits per month is what triggered them even looking at him.
07-01-2012, 06:23 PM
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