When a taxpayer makes money from something like selling marijuana, they still owe taxes on that income. The law requires the marijuana profits to be reported for income tax purposes. This type of income is usually only reported and tax collected if the IRS catches wind of the illegal activities. This is often limited to…
Category: Unreported Income
Unreported Income
Failing to report income on tax returns, including unreported tips, self-employment income, and other unreported earnings. Give us a call to see how we can help, (713) 909-4906.
Tax on Funds Received as an Intermediary Conduit
As tax attorneys in Houston, we often see investments made by local ethnic communities that are focused on investing overseas or raising money from overseas. This often involves those who immigrate to the U.S. from foreign countries, and do well in the U.S. financially. The investments are often made based on direct knowledge of opportunities…
The IRS’s Bank Deposit Analysis
When conducting an audit involving income tax returns, the IRS will almost always check for unreported income. The IRS has specific procedures for conducting this type of income verification. This often involves a bank deposit analysis by the IRS agent. This type of analysis can be used to identify unreported income, but it can also…
Are Funds Advanced to Third Party Subject to Tax?
With a cash basis taxpayer, the general rule is that the taxpayer recognizes gross income when money is received. But what if the taxpayer holds money on account for others? This is a common practice. These transfers may include deposits, advances, etc. It can even include funds held in trust for the benefit of a…
Car Dealerships and Cash Reporting Requirements
Cash-based businesses can pose a challenge for the IRS, as they may be susceptible to tax fraud. To address this issue, Section 6050I(a) requires businesses to report any cash payments exceeding $10,000. This provision enables the IRS to track substantial cash payments made to cash-based businesses, and Form 8300 is the designated form for reporting…
IRS Has the Burden of Proof for Items of Income
In tax disputes between taxpayers and the IRS, the burden of proof lies with the IRS to prove that a taxpayer earned more income than reported. The IRS has to have some evidence. These rules are set out in Section 7491, which shifts the burden of proof to the IRS, making it more difficult for…