What are the risks with the strategy

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Question: Duff is really interested in decreasing his tax liability, and by his very nature he is somewhat aggressive. A friend of a friend told him that cash transactions are more difficult for the IRS to identify and, thus, tax. Duff is contemplating using this "strategy" of not reporting cash collected in his business to minimize his tax liability. Is this tax planning? What are the risks with this strategy?

Instructions: Use the memo format below to prepare a response to Duff's inquiry. Your conclusion should reference the applicable paragraph in the federal tax handbook and Internal Revenue Code Section. Make sure your memo uses the appropriate tone as this is a sensitive matter to Duff!

Reference no: EM131725672

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