A friend was speculating about two restaurants next door to each other where one was full and the other was always empty. He suggested that the empty one was laundering money.
Sorry, a restaurant is not a good business for laundering money. The reason is simple: for every dollar of revenue that a restaurant shows on its books there must be a comparable $.75 or more in cost of goods and labor. The IRS can check those numbers easily.
Laundering money has a bad name. I am strongly in favor of legalizing laundering money.
If you make your money illegally you want some way to be able to spend it. If you buy a fancy house or several fancy cars with cash and cannot show an income source for that cash and a US tax return, you will go to jail.
If you want the fancy house and the fancy cars you must find a way to pay federal and state income tax. That is called laundering money.
The best way to launder money is to have a business where the gross revenues have little or no relationship to costs..... then pay yourself high profits and your friends very high salaries. Such is the case for a music hall where the money can pour in the front door and the costs do not go up proportionately.
The ideal business is one where you can have large gross revenues or capital gains with little or no expenses. Our restaurant is a terrible source of money laundering.
An art gallery is a good example for money laundering because the cost of the art cannot be known by the IRS for certain. I have told a story about this in an earlier blog. A similar example would be rebuilding a burned-out house. You pay the workers with illegal cash and the sell the finished building for capital gains. Pay your taxes. You have laundered your money.
There are many other examples but you get the idea.
Laundering money has a bad name. I am strongly in favor of legalizing laundering money.
If you make your money illegally you want some way to be able to spend it. If you buy a fancy house or several fancy cars with cash and cannot show an income source for that cash and a US tax return, you will go to jail.
If you want the fancy house and the fancy cars you must find a way to pay federal and state income tax. That is called laundering money.
The best way to launder money is to have a business where the gross revenues have little or no relationship to costs..... then pay yourself high profits and your friends very high salaries. Such is the case for a music hall where the money can pour in the front door and the costs do not go up proportionately.
The ideal business is one where you can have large gross revenues or capital gains with little or no expenses. Our restaurant is a terrible source of money laundering.
An art gallery is a good example for money laundering because the cost of the art cannot be known by the IRS for certain. I have told a story about this in an earlier blog. A similar example would be rebuilding a burned-out house. You pay the workers with illegal cash and the sell the finished building for capital gains. Pay your taxes. You have laundered your money.
There are many other examples but you get the idea.