For the months of October, November and December I am planning not to deposit any cash and insurance checks (provided they are valid for 120 days) into my business accounts. This is to deplete the accounts so I can avoid taxes.
Does the term “constructive receipt” mean anything to you? The IRS says if you received it, whether you deposit it or not, it’s income. Talk about a HUGE risk, audit wise.
Firstly, is it legal?
It’s legal not to deposit it, there’s no law that says you must deposit it. Reporting it? See above in red.
Secondly, is it worth the trouble?
Absolutely not. It’s different if you’re away the last week of December, office is closed, and you cancel your mail. When you receive your mail the first week of January you deposit the checks you received. Now, if you’re going away for 3 months, closing the office for 3 months…..yea right!
This post first appeared on DentalTown.