FlyerTalk Forums - View Single Post - Spending $250K for Centurion, How About IRS? Large Cash deposits out of your league?
Old Aug 16, 10, 9:24 am
  #31  
thissnisnottaken35
 
Join Date: Jun 2010
Location: Maryland
Programs: Amex Plat, SPG Gold
Posts: 13
Originally Posted by andrewpartyman View Post

The actual problem is that every transfer he gives you over about $12k (I think that's the limit for a tax-exempt "gift") is subject to U.S. income tax. So every time you received money from him, you would have to pay taxes therefore making every transaction with him a losing one. Wouldn't take long to be in the 35% tax bracket, therefore making your 60k/year base salary worthless when it is taxed at 35% + state income tax + medicare tax + social security. Going to work would suck for you.
The OP wouldn't be subject to gift taxes; he'd be acting as an agent for the customer (not a reseller). He'd show all of the money from buying electronics as business revenue, offset by the cost of acquiring the merchandise.

The IRS won't have a problem as long as you keep good records. They might laugh at you when you tell them you're trying to generate massive pass through spending to get a Centurion card.

As long as you do the proper paperwork, it doesn't matter that you'll have banking transactions over $10k. It's just a flag for the IRS -- and if you're keeping your records on the up-and-up, you'll survive an audit.

That said, you're setting yourself up for an audit, an FR, and potential trouble if your customer fails to pay you for any reason.

If you're not planning on getting a cent card this year, and you don't care about MR, then there's honestly no point in going through all of that trouble.
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