Discussion:Ethical? Cast your vote!

CAST YOUR VOTE!

So, let's analyze this. Your client has a loss of $5k from his business. If it were not for the EIC, he would surely report all expenses he is able to (regardless of whether that receipt is in the file or not). Hmmmm. So now we have EIC and the potential for more money if he reports income when in fact he had a loss.

Well, in my book that would not be ethical.

This is obviously the same gentleman you wrote about yesterday. I note 'Contract labor' which could be payroll, interest which might be mixed use of a credit card, and the fact that apparently he has no other source of income.

Section 179 is an election. You are not required to elect that treatment. Don't confuse that issue with what you are proposing. You are proposing taking a position which is contrary to stated authority - I see no way you could argue against the preparer penalty under §6694.

Follow Death&Taxes link and read Riley2's response closely. Riley2 is a TaxAlmanac guru here and when he speaks, we listen.

Here is the link to CCA 200022051 that NYEA referred to: [1]

It's pretty clear on page 3 what the Service will do if you don't take all the expenses. They will.

Disregarding deductions in this case, isn't a great idea. This is why the EITC rules are different. If you doing it in an attempt to "defraud" the government, that is looked upon differently, than if you choose not to take expenses for various reasons.

Basically, the client doesn't qualify for the EITC, from what you say. If he doesn't qualify, then he doesn't and move on.

Don't be foolish. Further, I doubt you will look good in prison orange.

I join Natalie, JR1, D&T and vote NO.

Tom

Ooops, here it is: http://www.jumpstation.ca/recroom/comedy/python/nudge.html

Just how far must you go to prove, look into, research, a possibly valid expense in this particular circumstance?

Great sketch!

And now for something completely different, the 16 ton weight will drop on your head for being stupid to think you qualify for EITC!

Tom

It is hard to compete with a guy who will cheat.  The only way to compete is to get him off the street.  So there's my fire for your two little feet.

I have never done this before and, after reading your responses and sources, will continue to make it my practice to not reduce deductions for the purpose of receiving the EIC. THANK YOU for helping a fellow tax guy not to be led astray by others who are obviously less informed.

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

CCA 200022051 is clearly the law, so you're required to act in its accordance, but with respect to elections, as Judge Hand said, you can make LEGAL elections to lower your tax burden - case in point: the 179 election.

jerry