It doesn’t matter the source of revenue or the category of expense. They aren’t balanced against each other in any way at tax time, they are all just added up: money out versus money in.
Tax write offs are just expenses the business incurred. Say I make $100 in revenue but I had to buy some paper and pencils that year for $20. I’d have $20 in business expenses to write off against my total revenue for the tax year. So I’d have $80 in taxable revenue for that tax year after the business expense deduction (write off).
Even if you alternative tax years you’re just kicking the can down the road. Businesses actually do this quite frequently. They try to make as many deductions as they can and will even go negative sometimes and all those loses will carry forward into future tax years. Amazon did this for years and years by reinvesting into the business and accumulated massive tax deductions so this is one way “corporations don’t pay any taxes.” Well they took huge losses for years and years and are just catching back up on those losses as deductions in current yearss, they’re not “not paying taxes,” they just had no profit to tax even though they had revenue.
It doesn’t matter the source of revenue or the category of expense. They aren’t balanced against each other in any way at tax time, they are all just added up: money out versus money in.
Hmm. Perhaps there’s something I’m not getting. Is it only loans from pre-approved sources (like banks) which can have their interest written off, or loans from any source (like Jimmy the Nose who lives in the alley)?
The interest paid against a loan would be categorized as an interest expenses on your P&L. That would be captured on your tax filing and would reduce your taxable income by the amount of interest paid out in that tax year. It doesn’t matter who the loan was from for that to happen. You can make a loan from yourself to the business and charge the business a reasonable interest rate or the loan could be from anyone or business.
It doesn’t matter the source of revenue or the category of expense. They aren’t balanced against each other in any way at tax time, they are all just added up: money out versus money in.
Tax write offs are just expenses the business incurred. Say I make $100 in revenue but I had to buy some paper and pencils that year for $20. I’d have $20 in business expenses to write off against my total revenue for the tax year. So I’d have $80 in taxable revenue for that tax year after the business expense deduction (write off).
Even if you alternative tax years you’re just kicking the can down the road. Businesses actually do this quite frequently. They try to make as many deductions as they can and will even go negative sometimes and all those loses will carry forward into future tax years. Amazon did this for years and years by reinvesting into the business and accumulated massive tax deductions so this is one way “corporations don’t pay any taxes.” Well they took huge losses for years and years and are just catching back up on those losses as deductions in current yearss, they’re not “not paying taxes,” they just had no profit to tax even though they had revenue.
Hmm. Perhaps there’s something I’m not getting. Is it only loans from pre-approved sources (like banks) which can have their interest written off, or loans from any source (like Jimmy the Nose who lives in the alley)?
The interest paid against a loan would be categorized as an interest expenses on your P&L. That would be captured on your tax filing and would reduce your taxable income by the amount of interest paid out in that tax year. It doesn’t matter who the loan was from for that to happen. You can make a loan from yourself to the business and charge the business a reasonable interest rate or the loan could be from anyone or business.