Question
Anderson started his lawn mowing business in 2022. As he does not know much about tax, Anderson often watches Tiktok and follows many tax/financial advisors
Anderson started his lawn mowing business in 2022. As he does not know much about tax, Anderson often watches Tiktok and follows many tax/financial advisors there. Below are a few tax saving tips that Anderson has implemented in 2022 after following those Tiktok tax experts:
One of Andersons clients was a big car dealership in San Antonio. Anderson advises his clients that instead of paying him cash, they should pay him in car discount. Specifically, instead of Anderson receiving $5000 cash for his provided lawn service in 2022, he would receive a $5000 discount when purchasing his truck at the dealership in 2022. In that way, Anderson will not have to recognize the $5000 as gross income.
Anderson learned that one way to reduce tax liability is by accelerating expenses deduction. For that reason, in 2022, he tried his best to generate as much expenses as possible to lower his tax. One of the actions he took to generate business expenses is to intentionally run the red light with his business truck multiple times in 2022. Anderson then paid $3000 traffic tickets from those violations. And because he violated the traffic law using the company vehicle and during business hours, all of the expenses will be paid by his business, thus generating business deduction, lowering his business taxable income.
Would the above 2 tax saving strategies work? Address each of them separately and explain in detail why they would or would not work.
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