Martin's Lawn Care is a cash-basis taxpayer. Martin Smith, the sole proprietor, is considering delaying...
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Accounting
Martin's Lawn Care is a cash-basis taxpayer. Martin Smith, the sole proprietor, is considering delaying some of his December 2020 customer billings for lawn care into the next year. In addition, he is thinking about paying some of the bills in late December 2020, which he would ordinarily pay in January 2021. This way, Martin claims, he will have less income and more expenses, thereby paying less tax!
In regards to the mini-case above please respond to the following questions:
What tax rules apply to this situation?
What ethical principles apply to this situation?
Are Martin's proposed actions illegal or unethical?
If you believe illegal or unethical, what would address the problem? If you believe NOT illegal or unethical, what circumstances, if introduced, could make it so.
How would you advise Martin?
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