Offer terms...should I ask for Income tax returns?

[CAnewbie]

I have made an offer to purchase a coin laundry, and I included various terms/conditions (to review utility bills, copy of lease agreement, income tax returns, etc, etc), but the owner does not wish to share his income tax returns with me (everything else is ok with him). He explains that since it's a cash business, it's not useful to see his tax returns, because he doesn't report what he actually makes to the IRS (he did tell me that according to what he reports to the IRS...he runs his coin laundry at a loss.) should I worry? Is he trying to hide something? Is it customary to ask for income tax returns? I would like to see it for two reasons...(1) to see what the bare minimum is (worst case scenario) that the store will earn (even though he has now shared that he runs it at a loss), and (2) If I do buy it, I would like to know what he has been claiming to the IRS, so that I can continue in the same range, I think it would be a red flag for the IRS to see a drastic different in income reporting from one year to the next, correct? Please advise.

[Jefflange]

Just the fact that you would post this question should send you a red flag that you should not be a business owner.

[azkid]

I'm not sure it really makes a difference...some people like to see them for the depreciation schedules and whatnot. It'd be nice to see, but wouldn't be a deal killer if everything else was acceptable.

[millenniumplus]

Azkid has a point in seeing the depreiciation schedule. Thing is after you see that (d-schedule) and if they
do provide their tax returns that show a loss you still have a decision to make, yes. If it is really showing a
loss then ask yourself, "can you grow the business and if so by how much" to turn a profit. Like many, you
are at a crossroad from the age old question - do laundromat owners really "not claim" some money earned!?
The next question would be how much is he/she really keeping as side-line money? Go with actual information
provided and growing the business to help make your decision. If it turns out the owner was doing what
they said, so much the better. Oh, you don't really need to see what the owner claimed to keep in line with
what they were doing to avoid IRS audit. When you understand monthly debt it will all become quite clear
what they were doing to some degree.

[Howard]

Why do you care about their depreciation schedules? When you buy a business (or asset) the depreciation starts a fresh based on your cost for the asset it has absolutely nothing to do with what the previous owner was doing.

[petefritz]

I think it is nosey to pry into a tax return. With water bills, gas bills, you don't need a tax return.
My tax returns show my mats at a loss most years.... my my! I need to dump those sore loosers.....

[neal]

When I was looking to buy a mat. I looked at a few of them most were overpriced and dumps but the good ones at good prices dont stay for sale very long. They may sell when you are still looking so dont take to long to decide.

[hotwash]

best way is too do the collections for month while legal bull is worked out spend as much time as you can in the mat all different hours, that will be the best way ask him to see his collection sheets he must have something and they should match. make sure he is not including drop as double, they always try that one. they put coins in to the washer so you can only count half the total drop off for a week or take it out of the collection of the coin boxes. take a good look at how you can increase revenue and make a plan to make it happen i doubled my store income in six months when i bought my first mat.