Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The recent revelations about Donald Trump's payment of zero taxes for many years, and only $750 for 2016, shines a spotlight on the loss carryover provisions in the tax code. Are these provisions reasonable?
I think not. If you have a loss in 2020, then don't pay tax. If, in the following year, your income is positive, then pay tax on it. To be able to write off a loss you took in 2020 all the way out to 2027 is, in my mind, ridiculous and is a massive loophole that should be closed. While Trump has exploited these provisions to an absurd degree, he is not alone.
At the very minimum if we don't eliminate the tax loss carryover completely at least shorten it to no more than 3 years. Again, it doesn't make sense if you lose money in 2020 to be able to deduct a portion of it all the way out in 2026. We pay income tax on income: if you have no income in a year, then don't pay tax for that year; if you have positive income in a year, then pay tax on that income, period.
I don’t see any reason to get rid of loss carry backs and carry forwards. They’re common all over the world. A year is an arbitrary and largely irrelevant time period for a business that’s a going concern. There’s no reason not to let business ride out fluctuations of profit and loss.
Nols are also particularly useful to incentivize business as they start up since it’s common to have several years of losses and it’s just bad tax policy to immediately start hammering a fledgling business that’s just starting to take root.
I’m no fan of trump, but theres nothing particularly eye raising about $26 million of consulting deductions over 8 years in a billionaires tax situation. You could easily rack that up in accounting fees, legal fees, and due diligence.
And not only are nols capped by actually having income but you can only reduce your income down a certain percent. It often various by country, but it’s rare to actually be able to reduce your income 100% with nols.
I don’t see any reason to get rid of loss carry backs and carry forwards. They’re common all over the world. A year is an arbitrary and largely irrelevant time period for a business that’s a going concern. There’s no reason not to let business ride out fluctuations of profit and loss.
Nols are also particularly useful to incentivize business as they start up since it’s common to have several years of losses and it’s just bad tax policy to immediately start hammering a fledgling business that’s just starting to take root.
OK then, how about restoring "income averaging" for us ordinary wage earners ? It was taken away in 1986. For a few years I was able to "smooth out" the taxes on my income ups and downs.
OK then, how about restoring "income averaging" for us ordinary wage earners ? It was taken away in 1986. For a few years I was able to "smooth out" the taxes on my income ups and downs.
What makes a year the right time period for measuring one's financial state? If one incurs devastating losses in 2020, will things be all reset and magically back to good because the calendar flips over to 2021? What if those losses caused them to take on debt that will need to be repaid until 2025?
The recent revelations about Donald Trump's payment of zero taxes for many years, and only $750 for 2016, shines a spotlight on the loss carryover provisions in the tax code. Are these provisions reasonable?
I think not. If you have a loss in 2020, then don't pay tax. If, in the following year, your income is positive, then pay tax on it. To be able to write off a loss you took in 2020 all the way out to 2027 is, in my mind, ridiculous and is a massive loophole that should be closed. While Trump has exploited these provisions to an absurd degree, he is not alone.
At the very minimum if we don't eliminate the tax loss carryover completely at least shorten it to no more than 3 years. Again, it doesn't make sense if you lose money in 2020 to be able to deduct a portion of it all the way out in 2026. We pay income tax on income: if you have no income in a year, then don't pay tax for that year; if you have positive income in a year, then pay tax on that income, period.
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? Limiting it to 3 years doesn't sound reasonable either, again if you haven't increased your economic position, the government doesn't deserve anything.
It's not a massive loophole, it's a purposeful tax provision that enables businesses to manage cycles in the economy. There are lots of other restrictions around NOLs (382 limitations, SRLY limitations) that provide safeguards from the most egregious abuses. Personally I think those restrictions should actually be lessened, not strengthened, as they are incredible restrictive and complex to manage.
The recent revelations about Donald Trump's payment of zero taxes for many years, and only $750 for 2016, shines a spotlight on the loss carryover provisions in the tax code. Are these provisions reasonable?
I think not. If you have a loss in 2020, then don't pay tax. If, in the following year, your income is positive, then pay tax on it. To be able to write off a loss you took in 2020 all the way out to 2027 is, in my mind, ridiculous and is a massive loophole that should be closed. While Trump has exploited these provisions to an absurd degree, he is not alone.
At the very minimum if we don't eliminate the tax loss carryover completely at least shorten it to no more than 3 years. Again, it doesn't make sense if you lose money in 2020 to be able to deduct a portion of it all the way out in 2026. We pay income tax on income: if you have no income in a year, then don't pay tax for that year; if you have positive income in a year, then pay tax on that income, period.
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? You may think that is unfair since you don't have $39 Million to invest, but if there were no way of recouping the cost of business expenses on a person's taxes, then why should anyone invest their money in a business that may employ hundreds of people if they're not allowed to deduct their business expenses?
If you stop all business investing, then who is going to give you or your children or your neighbors a job?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
