June 14, 20223 yr I can’t wrap my head around this. Parent pays adult children as employees, but cpa does w2 with high withholding which once refunded is then compliantly handed to parent to pay in to a quasi life insurance trust for the child. One child has a full time job unrelated to parent and other child is a student Issue 1. Is the work legitimate? Gray area. Paid at higher rate than what work entails. Issue 2. Payroll and income taxes are paid so govt gets its share. issue 3. Is it bypassing gift tax if issue 1 is not considered legitimate? Anything else? Issue 4. What is blowback on children if irs investigates and issue 3 is confirmed?
June 14, 20223 yr So basically paying the kid to get money out of the business and the kid then buys a life insurance policy with it instead of spending it? Business deducts the wages. Business pays employment taxes. Kid pays income tax and employment tax. Lots of arbitrage there among tax rates That seems like very little juice for the squeeze unless we're talking large sums where a few points saved equals big bucks....or if the focus is on the issue #3 and the annual gift exclusion. The withholding seems dumb. If you want to pay a kid, the tax is the tax and the withholding/refund part seems irrelevant at first glance....unless that's dad's way of keeping the kid from spending it..... Downside risk is that the wage could be treated as a dividend, not reasonable compensation, and that could cause some heartburn. I guess in thinking through this quickly, that must be the angle - gift over and above the annual gift exclusion and hope the IRS doesn't invalidate the payment as wages and treats them as a dividend.
June 14, 20223 yr sounds like you're gonna be involved in the economy of trading ramen packets and bubble gum for physical protection
September 24Sep 24 I watched a Grant Cardone youtube video where he discusses paying his 18 year old daughter a multiple 6 figure salary, and then she invests the money back into his real estate deals. He lets her spend a few thousand on fun stuff. If Grant's doing this, it's gotta be legit. And a reasonable defense when speaking to an IRS agent.
September 24Sep 24 Is @Allen_Bernier a bot trying to build up post count? What's up with digging up multiple old threads and throwing out random advice?
September 24Sep 24 3 hours ago, Nice Guy Eddie said: I watched a Grant Cardone youtube video where he discusses paying his 18 year old daughter a multiple 6 figure salary, and then she invests the money back into his real estate deals. He lets her spend a few thousand on fun stuff. If Grant's doing this, it's gotta be legit. And a reasonable defense when speaking to an IRS agent. I think he gets around it by including her in videos, promotional items, and bringing her to his high dollar speaking events. He may not be telling the exact truth of how much he pays her but there are probably comps out there to justify it if under an IRS audit.
September 24Sep 24 2 hours ago, HRSchenker said: I think he gets around it by including her in videos, promotional items, and bringing her to his high dollar speaking events. He may not be telling the exact truth of how much he pays her but there are probably comps out there to justify it if under an IRS audit. I’m sure Cardone has justification for paying his daughter. Feels like half of his online content is about telling you how to retain millions of your annual income via tax schemes. Advice for the common man. Only $999 for this weekends seminar.
September 24Sep 24 Here's a multiple choice. The difference between tax avoidance and tax evasion is? A. Whatever the IRS says. B. A smart lawyer C. 10 years in prison D. All of the above Edited September 24Sep 24 by Surly Bevo
September 27Sep 27 On 9/24/2025 at 3:15 PM, Surly Bevo said: Here's a multiple choice. The difference between tax avoidance and tax evasion is? A. Whatever the IRS says. B. A smart lawyer C. 10 years in prison D. All of the above Ah, Gene Hackman. He did play a good scoundrel.
October 7Oct 7 On 9/24/2025 at 10:15 PM, Surly Bevo said: Here's a multiple choice. The difference between tax avoidance and tax evasion is? A. Whatever the IRS says. B. A smart lawyer C. 10 years in prison D. All of the above
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