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What makes a year the right time period for measuring one's financial state?
By definition income is money received over a fixed period of time, as authorized by the 16th amendment. Your net worth is irrelevant to income. If someone makes $15,000 in income this year they will pay the same tax whether they have $1,000 in the bank or $1 million (assuming AMT doesn't kick in).
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Originally Posted by SuiteLiving
If you lose $100 one year and make $100 the next year, you're no better off (no accession to wealth), why should the government be able to tax you?
It's an income tax, not a wealth tax or net worth tax. Whether your net worth goes up or down is irrelevant.
So you see, within a pure definition of income tax, NOL carryovers don't make sense. Now if we want to base taxes on both income and wealth, then let's have a tax system that does that and dispense with the NOL carryover and AMT nonsense.
By definition income is money received over a fixed period of time, as authorized by the 16th amendment. Your net worth is irrelevant to income. If someone makes $15,000 in income this year they will pay the same tax whether they have $1,000 in the bank or $1 million (assuming AMT doesn't kick in).
It's an income tax, not a wealth tax or net worth tax. Whether your net worth goes up or down is irrelevant.
So you see, within a pure definition of income tax, NOL carryovers don't make sense. Now if we want to base taxes on both income and wealth, then let's have a tax system that does that and dispense with the NOL carryover and AMT nonsense.
It's an income tax that has an annual accounting period. The NOL rules lessen the impact that has to reduce the chance that a person that hasn't truly earned any income has to pay tax.
Elimination of the NOL carryovers would create a wealth tax.
Ditch the income tax and go with the FairTax. Tax consumption instead of labor. Best part is all the international travelers to the US will help kick in by being taxed. Why limit taxes to just 140 million workers when you can tax 325 million US consumers plus millions more tourists.
Perhaps you didn't know that the IRS tax code sets a limit of 39 years for depreciation of most commercial buildings. That means that a commercial building that cost $39 Million dollars could be depreciated at the rate of $1 Million per year for 39 years.
If a person operates this building as a business and fails to make at least $1 Million in profit every year (not counting the depreciation), then that person will have a net loss each year for income tax purposes. Why should the person not be permitted to claim that loss on his taxes?
At the end of that 39 years the company isn't left with a building with a zero market value, in fact it will likely be a $390 million dollar value.
As an individual, I sure wish I could deduct my mortgage and insurance and utilities from my revenue to determine taxable income.
By definition income is money received over a fixed period of time, as authorized by the 16th amendment. Your net worth is irrelevant to income. If someone makes $15,000 in income this year they will pay the same tax whether they have $1,000 in the bank or $1 million (assuming AMT doesn't kick in).
By definition? In other words, an arbitrary time interval.
Loss carryover is not the issue. Rather, it's a tax code which is so complicated and littered with so many loopholes and grey areas that enforcement is impossible, except for returns which only have income sources reported by other entities (W-2 wages, 1099 income, for example).
It should be expected that many businesses will report losses in their early years. But these losses should only be usable to offset future business profits. "Business losses" should not be able to offset wages or any other form of income. Also, being able to operate a business for decades and never pay any income tax does not pass the fairness "sniff test" in my opinion.
Same comment for passive real estate losses. People should not be able to use so-called passive losses to offset other forms of income. And even just the notion of depreciating an asset that generally appreciates is specious at best. Of course there are armies of lobbyists who would fight any change to these laws.
Ditch the income tax and go with the FairTax. Tax consumption instead of labor. Best part is all the international travelers to the US will help kick in by being taxed. Why limit taxes to just 140 million workers when you can tax 325 million US consumers plus millions more tourists.
Sounds good on the surface but the tax cheating will be off the charts as you will have all kinds of private party sales under the table that will go untaxed. I don't agree with the Fair Tax proposal that exempts all wholesale purchases from the tax, it puts the whole burden on the consumer. This will also induce more tax cheating as people will set up shell companies to make purchases with to evade the Fair Tax. That said, with some adjustments I do think a consumption tax instead of a labor tax has a lot of appeal.
At the end of that 39 years the company isn't left with a building with a zero market value, in fact it will likely be a $390 million dollar value.
As an individual, I sure wish I could deduct my mortgage and insurance and utilities from my revenue to determine taxable income.
If the building appreciates that much, it would be sold at a pure gain. 39 years of basis fully depreciated plus the 390 million of proceeds.
Your “revenue” isn’t revenue for one thing. If you’re talking about money from your job, it’s either salary or hourly. And thus, you have no risk of loss. Your mortgage and insurance also has absolutely nothing to do with creating that income.
A business gets to deduct those items because those items are used in the PURSUIT (aka there’s risk)...of profit. You have no such risk as an employee and you’re not putting wear on your assets to pursue that income.
He also declared his home an investment property to get around the SALT limit that he created.
Does the article bother to look into what her services were? What level of job she had? If the costs are legit that an arms length buyer of the services would charge there’s not really anything wrong with it.
You can be objective in fact but not objective in appearance. In other words, if she is a highly skilled employee who can get that type of pay elsewhere for those same services, it doesn’t matter if she’s his daughter. It’s a simple transfer pricing type transaction that just needs to be arms length.
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