Right... realistically, if you are a losing player and don't report anything, the IRS will never be the wiser... or care, because it's likely little or no money out of their pocket. But if they suspect that you have intentionally not reported (or misreported) income in order to avoid paying them their fair share, that's when things will get ugly.
My accountant told me it really depends on who shows up to do the audit. She said many of them are nice, reasonable people, who are happy to work to find a quick and fair resolution. But she said there are also some real pricks, who find joy in going after every last dime, inflating your income and discarding as many deductions as possible, basically making the auditee's life a living hell. So... try not to get that guy if you ever do get audited.
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