Question

Charlie’s Green Lawn Care is a cash basis taxpayer. Charlie Adame, the sole proprietor, is considering delaying some of his December 2018 customer billings for lawn care into the next year. In addition, he is thinking about paying some of the bills in late December 2018, which he would ordinarily pay in January 2019. This way, Charlie claims, he will have “less income and more expenses, thereby paying less tax!”Is Charlie’s way of thinking acceptable?

Answer 1

1. Charlie's way of thinking to defer the payment of tax is not a good idea, he is overriding the main concept of taxation, the plan to prepone expenses and postpone revenue is not a good practice.
2. Charlie should not do the same and proceed to make the tax presentations as usual as the ordinary course.
3. Even if Charlie do so he should have to pay the tax however in the future years.
4. But there is a matter of uneven i gome distribution, which is a negative aspect.
5. So Charlie should continue to disclose as per the actual transactions that took place and his idea is not a good one.