Is It Legal To Buy/sell Company Property To Your Personal Self If You Own The Company As A Tax Shelter Method?
Scenerio: уου οwn a successful company thаt mаkеѕ millions. Iѕ іt legal fοr уουr company tο bυу property (Ɩіkе a company car, boat, plane οr whatever) tο lower уουr company's profits, thеn turn-around аnԁ sell those company properties tο уουr personal self fοr $1.00. WουƖԁ thіѕ bе a successful tax sheltering method?
Items must be sold/distributed at FMV. So the $30,000 car sold for $1, triggers the requirement that the asset be listed as sold on the books at $30,000 and a 1099-DIV be issued for $29,999 (if a c-corp, for an s-corp, it won’t make a difference as the $29,999 will show up on the 1040), thus boosting the company’s income right back up to where it was.
The IRS would disallow this “sale” as the purpose of the transaction is to avoid income tax on the part of the person receiving the asset, and to falsely lower the income of the company.
The company would not be able to take a deduction for the “loss” and the person purchasing the vehicle would have income in the amount of the value of the asset regardless of the purchase price.
It would be a successful method to get a tax deficiency with penalty assessed against you.
No. This is your second similar tax evasion question today.