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URL:  http://boards.fool.com/would-eight-of-5k-deposits-spaced-over-a-couple-22767761.aspx

Subject:  Re: "Carry Tax" Date:  7/19/2005  8:43 AM
Author:  TMFPMarti Number:  80080 of 121446

Would eight of $5K deposits spaced over a couple of months avoid all unnecessary attention? Could even be done at an ATM.

I was wondering when this would come up, which is why I've stayed out of the discussion. The motivator for currency transaction reporting is money laundering, not tax enforcement. This series of transactions would be much more likely to trigger investigative interest than a one-time $40,000 cash deposit. (It's also illegal if done with the intent to avoid transaction reporting, and the banks are required to report these patterns.) It's easy to explain that you inherited $40,000 cash, but not easy to explain why you're trying to slip under the radar. From a tax standpoint, this approach coupled with a cash-based business, e.g. a laundromat, would just about guarantee an excruciating audit. In general, law enforcement people's instincts say, "If you're not up to something, why are you trying to hide what you're doing?" I found extreme inbred curiosity to be my greatest asset when working in tax enforcement.

As for the Grandpa's affairs angle, if he was running drugs and amassed only $40,000, he wasn't very good at it. IRS could, of course, try for an unreported income "cost of living" reconstruction, but I would find the "old crank who didn't trust banks" perfectly reasonable for anyone who lived through the bank holiday.

Phil
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