From: Black Unicorn <unicorn@schloss.li>
Date: Sat, 18 May 1996 15:04:58 +0800
To: "E. ALLEN SMITH" <EALLENSMITH@ocelot.Rutgers.EDU>
Subject: Re: Why does the state still stand:
In-Reply-To: <01I4QXLS5GQE8Y5F2B@mbcl.rutgers.edu>
Message-ID: <Pine.SUN.3.93.960515204300.10635Q-100000@polaris.mindport.net>
MIME-Version: 1.0
Content-Type: text/plain


On Wed, 15 May 1996, E. ALLEN SMITH wrote:

> From:	IN%"unicorn@schloss.li"  "Black Unicorn" 15-MAY-1996 18:59:01.44
> 
> >For these a company running at a constant net operating loss could be
> >formed to purchase cars for resale (funny how no one ever buys them) and
> >manage property (which no one seems to ever lease).
> 
> 	But won't such a company run into tax problems? In other words, the
> IRS is going to look with some suspicion on a company that keeps showing no
> profits (and thus no taxes) but keeps going anyway. They're going to think that
> the owners are making a profit anyway but concealing it - which is the case.
> I'm not sure how to handle this one, other than not owning major property
> (rental et al).
> 	-Allen

So what, pray tell, is the IRS going to do?  Impose a "we see no income"
fine and seize property?

They can audit, but audits are winable too.  An offshore company simply
keeps dropping cash into the local business.  That's not a crime.  The
local business is losing money like crazy, but who is to say they are
defrauding per se?  Bad business judgment is hardly tax fraud, and how do
you know (with a properly blinded ownership) that the assets that are
pouring into this company with all these expenses are taxible in the U.S.
in the first place?

---
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