5 ms·

To me, having to cut a big check to the IRS is the ultimate first world problem. I'd love to owe the IRS a million bucks because I made way more than that :)

jjeaff 9y ago
>made way more than that Well, not so fast. Depending on the way you earned that money and which state you lived in, you could very well end up paying more in taxes than you get to keep.
UncleMeat 9y ago
Yup. I'm happier if I am paying more taxes, as it means I am making more money.
- jjeaff 9y ago
  Yes, but I'd be even happier if I got to keep a larger percentage of that money.
- BigChiefSmokem 9y ago
  As an immigrant to this country it feels good to pay my taxes every year. It's the least I can do for everything this country has done for me and my family.
Alex3917 9y ago
> I'd love to owe the IRS a million bucks because I made way more than that A lot of the people who owe big bills to the IRS didn't make any money at all, and have no way to pay it.
- Namrog84 9y ago
  Can you elaborate more on this? You know you can also report losses to reduce taxes? Or do you mean that they spent their profits on non returnable expenses(e.g. A vacation)
  - jjeaff 9y ago
    One example is that your parents pass the family business or farm on to you when they die, the tax man comes knocking and wants his 40%. And the tax man says that family business is worth $10 million. You know you could never get that much money in a sale, but the IRS doesn't care. Have a fire sale and pay them the millions you owe in taxes. It turns out you were only able to sell it for about how much you owe in taxes. So, they adjust the appraised value and lower your tax burden right? Nope. Pay up and you may need to kick in a bit of your own money to make up the difference. Your welcome, says the IRS.
    - heyyyouu 9y ago
      This is when you fight the IRS in bankruptcy court -- it's your only shot.
  - niij 9y ago
    I believe GP is referring to people exercising options.
  - AdamJacobMuller 9y ago
    From a business perspective, if you spend money on illiquid assets expecting to make a profit, say, short-term profit that doesn't materialize or will take longer than expected to materialize the business will still owe taxes on the value of those assets but you may not have the liquid cash to pay for those assets. As an example, say your LLC buys a million dollars worth of round iPhone cases because you're 100% sure Apple is releasing a round iPhone before Christmas 2017. Apple comes out and says "sorry, we're pushing the release to Christmas 2018!" Now, your company has 1m in assets, probably more by a fair market value of round iPhone cases because you expected to sell them for 10m, so now the value of your company has increased by some millions of dollars. Now, say you bet 100% of your liquid cash on that (regardless of if that's a smart idea or not), how do you pay your tax bill? You could liquidate your round iPhone cases to someone today, but, you'll lose a ton of money on them. This isn't a 100% perfect example, in a lot of ways, but it does indicate a highly contrived example of ways in which you can have 0 free cash while having huge reportable income.

jjeaff 9y ago

>made way more than that Well, not so fast. Depending on the way you earned that money and which state you lived in, you could very well end up paying more in taxes than you get to keep.

UncleMeat 9y ago

Yup. I'm happier if I am paying more taxes, as it means I am making more money.

jjeaff 9y ago
Yes, but I'd be even happier if I got to keep a larger percentage of that money.
BigChiefSmokem 9y ago
As an immigrant to this country it feels good to pay my taxes every year. It's the least I can do for everything this country has done for me and my family.

Alex3917 9y ago

> I'd love to owe the IRS a million bucks because I made way more than that A lot of the people who owe big bills to the IRS didn't make any money at all, and have no way to pay it.

Namrog84 9y ago
Can you elaborate more on this? You know you can also report losses to reduce taxes? Or do you mean that they spent their profits on non returnable expenses(e.g. A vacation)
- jjeaff 9y ago
  One example is that your parents pass the family business or farm on to you when they die, the tax man comes knocking and wants his 40%. And the tax man says that family business is worth $10 million. You know you could never get that much money in a sale, but the IRS doesn't care. Have a fire sale and pay them the millions you owe in taxes. It turns out you were only able to sell it for about how much you owe in taxes. So, they adjust the appraised value and lower your tax burden right? Nope. Pay up and you may need to kick in a bit of your own money to make up the difference. Your welcome, says the IRS.
  - heyyyouu 9y ago
    This is when you fight the IRS in bankruptcy court -- it's your only shot.
- niij 9y ago
  I believe GP is referring to people exercising options.
- AdamJacobMuller 9y ago
  From a business perspective, if you spend money on illiquid assets expecting to make a profit, say, short-term profit that doesn't materialize or will take longer than expected to materialize the business will still owe taxes on the value of those assets but you may not have the liquid cash to pay for those assets. As an example, say your LLC buys a million dollars worth of round iPhone cases because you're 100% sure Apple is releasing a round iPhone before Christmas 2017. Apple comes out and says "sorry, we're pushing the release to Christmas 2018!" Now, your company has 1m in assets, probably more by a fair market value of round iPhone cases because you expected to sell them for 10m, so now the value of your company has increased by some millions of dollars. Now, say you bet 100% of your liquid cash on that (regardless of if that's a smart idea or not), how do you pay your tax bill? You could liquidate your round iPhone cases to someone today, but, you'll lose a ton of money on them. This isn't a 100% perfect example, in a lot of ways, but it does indicate a highly contrived example of ways in which you can have 0 free cash while having huge reportable income.