Tax Implications of Debt vs. Equity in Related Entities

Investors who engage in successful ventures often also invest in less successful ones. In some cases, one venture ends up funding another. When a taxpayer operates through multiple legal entities, this can lead to numerous complexities. For example, “due to” and “due from” intercompany transactions raise questions, even if they do not involve international transfers.…

Tax Consequences of a Loan vs. Capital Contribution

Taxpayers often structure their affairs to their advantage. Our legal system and even our tax laws allow for this. With many transactions, one way this is done is structuring transfers as either loans or capital contributions. The tax ramifications for the transfers can vary widely based on this type of broad classification. This distinction is…

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Using an Old NOL Carryforward

The things we take for granted these days. If you are younger than me, you may not realize it but there was a significant change that happened in the 1990s. Personal computers were just starting to actually be useful in the workplace. The ability to type and use a 10-day calculator were sought after job…

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Hobby Loss vs. Start-Up Expense?

Just about every business starts out with losses. This is the nature of start-ups. The activity will either gain traction and produce income and possibly a profit or, eventually, the activity end. This is basic economics and capitalism at work. The U.S. economy is based on these concepts, allowing would-be entrepreneurs the opportunity and motive…

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Categorized as Tax Loss

Can “Business Synergies” be an Asset that Increases a Tax Loss?

Can “business Synergies” Be An Asset That Increases A Tax Loss?

The tax consequence of a transaction often depends on how one characterizes or describes the transaction. Business synergies are often cited as the rationale for merger and acquisition deals. In a M&A deal, are “business synergies” a separate asset for tax purposes? Can you list “business synergies” as a separate asset and then take a…

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Tax Planning for the Start-up Limitation Rules

Tax Planning For The Start-up Limitation Rules

Our tax laws include start-up rules that limit the ability to deduct certain business and investment expenses. For business owners and investors with other sources of income, this can result in funds being sent to the IRS to pay taxes at a time when the capital is needed to fund the business or investment growth.…

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Avoiding Hobby Loss Limits for Long-Term Projects

Avoiding Hobby Loss Limits For Long-term Projects

Long-term projects often lose money. They often do so for several years. This is the result of a project that needs capital to build infrastructure or to develop a new market or to capture market share. Taxpayers may be disappointed to learn that the tax losses coming from these long-term projects in the early years…

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Categorized as Tax Loss

Bad Debt Deduction for Real Estate Lender for Non-Real Estate Loan

In the world of finance and investing, making loans is often seen as a relatively safe way to earn a higher rate of return than other investment opportunities. For many individuals, this means venturing into the realm of real estate loans, where they can use their expertise to evaluate the merit of investment opportunities and…