tax evasion?

[EHH]

Is the following legal?

There is a corporation in Europe that manufactures and sells cosmetic products. That European corp sells their cosmetic products for $10/product.

My parents own a corporation in the caribbean which only pays 2% revenue tax.

So the idea is: i set up a corp in the US which will do online sales in cosmetics for the US market. My parent company buys the products from Europe for $10. I import these products to the us from my parents corporation for $40. I sell the products on the internet in the US for $50.

So instead of buying the products straight from Europe for $10 and selling them in the US for $50, i buy them for $40 from my parents. Thereby maximizing the end profit.
$30 profit - 2% tax
$10 profit - 30% tax (i don't know how much taxes are in the us)

It seems so simple and i was wondering whether the IRS sees this as illegal/tax evasion.

I appreciate anyone's advise.

EHH

[MDTURBO]

Originally Posted by EHH

Is the following legal?

There is a corporation in Europe that manufactures and sells cosmetic products. That European corp sells their cosmetic products for $10/product.

My parents own a corporation in the caribbean which only pays 2% revenue tax.

So the idea is: i set up a corp in the US which will do online sales in cosmetics for the US market. My parent company buys the products from Europe for $10. I import these products to the us from my parents corporation for $40. I sell the products on the internet in the US for $50.

So instead of buying the products straight from Europe for $10 and selling them in the US for $50, i buy them for $40 from my parents. Thereby maximizing the end profit.
$30 profit - 2% tax
$10 profit - 30% tax (i don't know how much taxes are in the us)

It seems so simple and i was wondering whether the IRS sees this as illegal/tax evasion.

I appreciate anyone's advise.

EHH

I'm no cpa, but your math is off...

You're only making $10 off the product after buying it from your parents for $40
Your parents are making $30 off the product, buying for 10, selling for 40.

If you're saying your parents give you the $30, then you have to claim the $30 as income as well, not just the $10 you made off reselling... You would be taxed on the income made. $10 if not getting money from parents, or $40 if parents give you the $30 they made...

[LdiJ]

In addition, you are doubling up the shipping and handling costs, which could be significant. Customs duties on a 40 dollar product vs a 10 product would also be much higher.

I suspect that the additional expenses in doing that would be more than any additional tax you would pay by importing the goods directly.