Q: Are company's that report income and have assets but don't actually do anything are legal?
I was doing some snooping online of a person that I know and I found that his father owns two companies that report income but don't have any dedicated websites or actually do anything!
He owns two companies, one is a holding company and the other is owned by that holding company. Both report in excess of $100,000 each year!
Is this legal?
A:
I am sorry it is difficult to accurately answer this question without knowing further facts about the "businesses" owned by the father. There are many reasons why a particular business entity may have been created and there are many ways that a company may have "earned" income even though it does not appear that they are doing anything as you had mentioned. Generally speaking, the IRS would be usually concerned about companies that were NOT reporting taxable income versus reporting income. So, if the father is reporting taxable income from his companies, then it is likely those companies would possibly need to pay taxes on the income, minus available deductions. I am sorry it is difficult to say that anything illegal is occurring under the scenario and facts that you relayed.
Please note that my answers are for general educational purposes only and do not establish an attorney-client relationship. You should contact an attorney for specific legal advice regarding your situation.
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