Kevin Bae

Non-Social in a Socially Networked World

IRS halts one man’s circular income generator

A brilliant man walks into a grocery store and buys the maximum number of gift cards he can buy. He does this as often as he can using his American Express card and enjoys the 5% reward for each purchase. In turn he purchased money orders using the gift cards, deposited those back into his account, and paid off the AMEX card and pocketing the difference between his reward and the fees from the gift cards and money orders. All was well until it worked too well.

Mr. Anikeev’s financial-optimization plan in 2013 and 2014—including $6.4 million in credit-card charges—led to an Internal Revenue Service audit and a finding that he and his wife had more than $310,000 in income that should have been taxed.

Wall Street Journal

The government is always watching!!