Reporting Cash .. May 06, 2005

Hi Patricia

[blush] Thanks so much for the compliment.

I'll bet you can guess about the $10,000 if you watch any TV at all.

It's basically to catch bad guys.

Congress and the US Treasury hit on $10,000 as a good number to help catch drug pushers, gamblers, arms traffickers, people working 'under the table' and others.

They figure that there's no reason for an honest person to be getting or depositing more than $10,000 in cash at any one time without being willing to disclose the source.

And frankly, when WAS the last time you needed more than a few hundred dollars in CASH?

With checkbooks, credit cards and ATMS, you can pay for anything you like, or get cash for the day pretty easily practically anywhere in the world. So, you don't need to carry much cash, even when you travel.

In fact, even traveling half the globe since the 1970's, I've never had more than a couple of hundred dollars on my person at one time. Usually closer to about $40 - $100 maximum. Then, if I'm held up - or find an open book store, I can't lose nearly so much. (Cancel that - bookstores take credit cards. There goes the darn budget!)

Have you ever seen $100,000 or so in cash? The funniest thing happened once. About a decade ago, this guy walked into my office with a shopping bag full of cash as down payment for a building - about $130,000 or so, he said.

At first, I did the automatic thing - start to count it. Then, just stopped.

I told the guy there was NO WAY were going to take responsibility for his cash. Come back with a cashier's check or checks - or no deal. I don't know where he got it - and I don't want to know!

Incidentally, let me tell you a little tiny secret about that $10,000. Shhhh...don't tell anyone.

The banks aren't just supposed to report any ONE transaction of $10,000. They are supposed to report patterns of cash deposits under $10,000 if they add up to more than the $10,000 limit in the course of the week or the month - regardless or whether several branches of that bank receive the money - or just the account-holder's branch.

IRS has figured out that people try to get around that $10,000 limit by only depositing $9,000 - several times a week or a month. Look, they're not stupid. And even if banks don't report those smaller transactions, IRS sees the patterns during audits of banks and uses that information to build a list of new people to audit.

And if they don't, they surely should. That's such an easy way for IRS to make a profit on an audit.

And you were just looking for a quick and simple answer, weren't you?

Have a lovely weekend.

Best Wishes,
Eva Rosenberg, MBA, EA