Each Saturday morning, Ted makes the rounds of the local yard sales. He has developed a keen eye for bargains, but he cannot use all of the items he thinks are "real bargains." Ted has found a way to share the benefits of his talent with others. If Ted spots something priced at $40 that he knows is worth $100, for example, he will buy it and list it on eBay for $70.
Ted does not include his gain in his gross income because he reasons that he is performing a valuable service for others (both the original sellers and the future buyers) and sacrificing profit he could receive. “Besides," according to Ted, "the IRS does not know about these transactions." Should Ted's ethical standards depend on his perception of his own generosity and the risk that his income-producing activities will be discovered by the IRS? Discuss.