A Business Fable in 30 Seconds: The Audit

The IRS decides to audit Bob and so he is summoned to the IRS office. The IRS auditor was not surprised when Bob showed up with his attorney.

The auditor said, "Well, sir, you have an extravagant lifestyle and no full-time employment, which you explain by saying that you win a lot of money gambling. I’m not sure the IRS finds that believable."

"I’m a great gambler, and I can prove it," says Bob. "Maybe I can demonstrate?"

The auditor thinks for a moment and says, "Okay. Go ahead."

Bob says, "I’ll bet you a thousand dollars off my tax bill that I can bite my own eye."

The auditor thinks a moment and says, "It’s a bet."

Bob removes his glass eye and bites it. The auditor’s jaw drops.

Bob then says, "Now, I’ll bet you two thousand dollars off my tax bill that I can bite my other eye."

The auditor can tell Bob isn’t blind, so he takes the bet.

Bob removes his dentures and bites his good eye with them. The stunned auditor now realizes he has wagered and lost three thousand dollars, with Bob's attorney as a witness. He starts to get nervous.

"Want to go double or nothing?" Bob asks, "I’ll bet you six thousand dollars that I can stand on one side of your desk, and urinate into that wastebasket on the other side, and never get a drop anywhere in between."

The auditor, twice burned, is cautious now, but he looks carefully and decides there’s no way anyone could possibly manage that stunt, so he agrees again.

Bob then stands beside the desk and unzips his pants. He makes a valiant effort but obviously he is unable to make it across the desk to the wastebasket on the other side, inevitably creating a mess on the desk.

The auditor, however, leaps with joy, realizing that despite the disgusting mess in front of him, he has just won six thousand dollars.

But Bob’s own attorney moans and puts his head in his hands.

‘Are you okay?’ the auditor asks the attorney.

"No, not really," says the attorney. "This morning, when Bob told me he’d been summoned for an audit, he bet me twenty-five thousand dollars that he could come in here and urinate all over your desk and that you’d be happy about it."

Moral of the Story: Diversify your revenue streams as the potential losses from one can still be more than covered by the solid returns on another.