Hi Carl,
Thank you for your response.
So the bottom line. In case of IRS audit they could wonder the nature of the money that people transferred to me. They could request the explanation. I would present them 1) my credit card statement, 2) my checking account statement, 3) as well as my explanation that this money was just reimbursement of my expenses helping to my friends.
(Once again, it's totally not clear out of my credit card statement *WHO BENEFITED FROM THESE PURCHASES* -- me or 3rd party. And I guess this is the biggest potential problem.)
And they MUST believe me and my explanations (unless they prove that I've lied) that I made these purchases for someone else (not for me).
Is this correct?
Is this how it normally works here in the USA?
So this is not a theoretical tax law question, it's more about how it would work in practice -- how IRS employees would treat this situation and how they would consider it. Because you know sometimes your fair behavior could look suspicious as well as your unlawful behavior could look lawful.
Thank you
