A taxpayer earning income in "cash" and not reporting it as taxable income is an example of:
A)tax avoidance.
B)tax evasion.
C)conversion.
D)income shifting.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Tax evasion is the intentional failure to report or underreport taxable income in order to avoid paying taxes. This includes not reporting income earned in cash. Tax avoidance, on the other hand, is legal measures taken to reduce one's tax liability. Conversion refers to the unauthorized use of another's property, while income shifting is a legitimate tax planning strategy where income is shifted from a high-tax individual to a low-tax individual or entity.

A Taxpayer Earning Income in "Cash" and Not Reporting It