While visiting a client to deliver their 2019 tax documents, one of the owners approaches you and asks "my Brother In Law told me I didn't need to claim money as taxable if it was cash, so in my first year of business, which was 2015, I didn't claim $50,000 in cash I received. Is he right?"

You tell the client "I will get back to you on that. I am going to go back to my office and research the item. "

When you get back to your office, you realize the client's gross income for 2015 was $190,000.

What will you tell your client? What laws govern this situation? What penalties are possible?  

Answer rating: 100% (QA)

1 I would tell my client that the Brother In Law was incorrect in saying that cash does not need to be claimed as taxable income According to the Internal Revenue Service IRS all income should be repo... View the full answer