The most valuable takeaway from this round of discussion about reporting trust income wasn’t the staggering figures, but a simple conclusion: compliance costs are certain, the cost of being audited is uncertain, and people are naturally drawn to uncertainty.
Many people treat compliance as a “matter of luck,” only to realize it was always “probability multiplied by asset size” when a notice demanding back taxes arrives.
The same goes for business: any money made by exploiting information asymmetries and gray areas is, in essence, borrowed from the future, with someone else setting the interest rate. My habit now is to first subtract the taxes and penalties in the worst-case scenario from any potential earnings, then decide whether it’s worth doing. A business I’m still willing to pursue after that is a real business.
Many people treat compliance as a “matter of luck,” only to realize it was always “probability multiplied by asset size” when a notice demanding back taxes arrives.
The same goes for business: any money made by exploiting information asymmetries and gray areas is, in essence, borrowed from the future, with someone else setting the interest rate. My habit now is to first subtract the taxes and penalties in the worst-case scenario from any potential earnings, then decide whether it’s worth doing. A business I’m still willing to pursue after that is a real business.