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 Re: Brad |
c6thplayer1 |
| Dean Steenburgh wrote: | | c6thplayer1 wrote: | | Dean Steenburgh wrote: | | c6thplayer1 wrote: | | R. Keith Whitt wrote: |
In the spirit of Tom Sterbens can you unpack that for us?
For example, I restore and sell classic Corvettes. If I have one listed for $25k and the buyer wants me to paint it at a cost of $7500, does the purchase price now become $32,500 or is it 2 separate transactions? Either way, why?
Thanks,
Keith |
Thats so simple it hurts. The purchase price for the car is 25K. Exactly what you have it listed for. The 7.5k is an additional cost for labor and material that will be added to the car and taxed differently depending on how your state applies taxes to material and labor. |
I too buy & sell classics of certain types.
So if I offer Keith $20k for the same car & he accepts the terms & I ask him to do a $5k detail job & deliver the car, I have technically made a legal purchase if he agrees to the terms.
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So , Keiths long or short term capital gain will be based on 20k While the 5k detail job , as shady as it is , will be taxed as income which will probably bring his total tax bill higher than it would be if he just sold the car for 25k. Keiths tax bracket also has a bearing this. |
In a private sale I do not believe you are responsible for submitting a 1099 for the cost of the detail job. It's up to Keith to make out an invoice for his own tax records. |
The 5k is consider income. |
Hon. Dr. in Acts-celeratology
Posts: 6385
10/13/16 9:34 pm
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| Re: Ethical Quandary...THOUGHTS? |
wayne |
| Aaron Scott wrote: | A man asked a preacher friend of mine about a novel, but perhaps unethical, idea for buying a vehicle, but not paying full taxes. Having learned if it, I thought it interesting enough to ask you all.
For example, let's say a car is for sale for $10,000. If the sales tax is 10%, that means a $1000 in sales tax. He thought to tell the seller that he would pay $3000 for the truck, but would pay the man $7000 to detail it, deliver it, fill it with gas, etc. This way, the sales tax would only be on the $3000?
Is it wrong to seek to shelter money from taxes? Or would this scenario be unethical? No, I am not referring to Donald Trump. This is just something my friend had been questioned about.
Thoughts? |
Listen to Brad but also.
it's actually shifting the tax burden back to the seller. The person selling the car will then have to pay taxes, etc on the money he earned from "detailing" the car. |
Acts Enthusiast
Posts: 1274
10/14/16 3:11 pm
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| Re: Brad |
Dean Steenburgh |
| c6thplayer1 wrote: | | Dean Steenburgh wrote: | | c6thplayer1 wrote: | | Dean Steenburgh wrote: | | c6thplayer1 wrote: | | R. Keith Whitt wrote: |
In the spirit of Tom Sterbens can you unpack that for us?
For example, I restore and sell classic Corvettes. If I have one listed for $25k and the buyer wants me to paint it at a cost of $7500, does the purchase price now become $32,500 or is it 2 separate transactions? Either way, why?
Thanks,
Keith |
Thats so simple it hurts. The purchase price for the car is 25K. Exactly what you have it listed for. The 7.5k is an additional cost for labor and material that will be added to the car and taxed differently depending on how your state applies taxes to material and labor. |
I too buy & sell classics of certain types.
So if I offer Keith $20k for the same car & he accepts the terms & I ask him to do a $5k detail job & deliver the car, I have technically made a legal purchase if he agrees to the terms.
. |
So , Keiths long or short term capital gain will be based on 20k While the 5k detail job , as shady as it is , will be taxed as income which will probably bring his total tax bill higher than it would be if he just sold the car for 25k. Keiths tax bracket also has a bearing this. |
In a private sale I do not believe you are responsible for submitting a 1099 for the cost of the detail job. It's up to Keith to make out an invoice for his own tax records. |
The 5k is consider income. |
Exactly! And it's not the buyers responsibility to send out a 1099 - it's up to the seller to declare the transaction.
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_________________
"Empty nest syndrome is for the birds!"
Email me at: SteenburghDean@gmail.com
Church planters are focused on just one thing ...introducing people to Jesus!
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Golf Cart Mafia Capo Famiglia
Posts: 4682
10/14/16 4:14 pm
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| Re: Ethical Quandary...THOUGHTS? |
Link |
| wayne wrote: | | Aaron Scott wrote: | A man asked a preacher friend of mine about a novel, but perhaps unethical, idea for buying a vehicle, but not paying full taxes. Having learned if it, I thought it interesting enough to ask you all.
For example, let's say a car is for sale for $10,000. If the sales tax is 10%, that means a $1000 in sales tax. He thought to tell the seller that he would pay $3000 for the truck, but would pay the man $7000 to detail it, deliver it, fill it with gas, etc. This way, the sales tax would only be on the $3000?
Is it wrong to seek to shelter money from taxes? Or would this scenario be unethical? No, I am not referring to Donald Trump. This is just something my friend had been questioned about.
Thoughts? |
Listen to Brad but also.
it's actually shifting the tax burden back to the seller. The person selling the car will then have to pay taxes, etc on the money he earned from "detailing" the car. |
So the government is still getting money for it. I don't see this as a huge ethical quandary. The question is whether the other guy is willing to accept the deal and take the tax responsibility. He may not realize the shift in taxes or his responsibility. And he may not report it.
If it is legal, I suppose it is an issue of conscience.
What if you worked for a company that let you buy a car, truck or van for the office for some small amount, but had a huge amount allocated to services. The policies are just badly written, and you have to work around them with weird deals like this to make the office function? Would it be unethical to use the funds in a transaction like this in order to work around the poor policies to get the resources you needed to run the business you were entrusted to steward?
Accountants and business people have to deal with legal and ethical ways of shifting money around to adjust their tax burden or fulfill other objectives. A lot of rules are arbitrary and if the decisions are legal, are not real ethical concerns. There are plenty of issues that are ethical concerns.
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Acts-perienced Poster
Posts: 11849
10/14/16 11:27 pm
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| Thank you for your replies... |
Aaron Scott |
For some, it seems to be clearly unethical. But for others it appears to be a case of just being sharp enough to exploit the legal loopholes.
Personally, I would seek to take advantage of every loophole I could find when paying income taxes. I follow the advice of Donald Koons, about the smartest tax man the Church of God ever produced (now deceased): "I believe in paying the IRS every dime I owe them...and not a penny more."
If someone wanted to pay you $10,000 for that old, 1972 rusted-out Pinto you have on blocks in front of your trailer, are you somehow duty-bound to say, "No, I cannot accept that much. It's worth only $99, and I won't take a penny more"?
And if you wish to SELL something, you can put it on sale for as high, low, or reasonable as you wish, right? No one is forced to buy it at any price.
So, while I do believe it is not specifically UNETHICAL to exploit every single LEGAL advantage you can get from the tax code, I do fear that the scenario that I heard of would not pass the "provide for what is honest in the sight of all men" notion.
That is, while a non-Christian is free to exploit the loopholes...Christians have to be very careful to not do what is dishonest.
This whole thing brought back a distant memory to me.... Many years ago, I was buying a pickup truck from a private individual. The price was $10,000. As he was signing over the truck, he asked if we wanted to make it for only $7000 (or something like that). I did not understand what he was implying--I doubt I even knew that I had to pay sales tax!--so I declined just because I felt that we ought to call it as it was. I now realized (and he explained it then, too) that this would save me on sales tax. Still, I declined. |
Hon. Dr. in Acts-celeratology
Posts: 6042
10/15/16 8:08 am
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