A taxpayer earning income in "cash" and not reporting it as taxable income is an example of:

Question

Quizplus · Accepted Answer

Tax evasion is the illegal act of not reporting taxable income or not paying taxes owed on taxable income. Choosing option A, tax avoidance, would refer to legal methods of minimizing tax liability. Options C and D do not apply to this scenario as conversion refers to using assets in a different way for tax purposes and income shifting refers to moving taxable income from one person to another. Option E is incorrect as one of the choices is correct - tax evasion.

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