3 ms·
Unless you're in the Cannabis industry and you don't want to worry about 280e
by dumbfoundded 7y ago
Unless you're in the Cannabis industry and you don't want to worry about 280e
- deleted 7y ago[deleted]
- cannaceo 7y agoHow does being a C Corp protect you against 280e?
- dumbfoundded 7y agoPass through tax liability. Let's say you did your accounting wrong and your company owes a bunch of money. These accounting mistakes usually account for double digit percentages of revenue. If you own an LLC, you get the benefit of only paying taxes once unlike a double taxed C-Corp. The cost is pass through tax liability. If your company owes taxes, the owners personally owe taxes. Let's take a real world example that happened to someone I personally know. They owned a dispensary, made some money not too much, everything going ok. IRS comes and says 4 years ago you did your taxes wrong. On revenues of ~$2.5M, she owed $400K that she deducted incorrectly due to 280e. In a day, she almost had her life ruined. She's back and opened a couple more dispensaries. She managed to survive others didn't. If you had created a C-Corp, the business goes bankrupt. IRS collects what it can. You go on your way. https://investinganswers.com/dictionary/p/pass-through-entity https://investinganswers.com/dictionary/p/pass-through-entit...