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My understanding is "losses" is kinda vague if you own one of these "pass through" entities you can pay yourself a salary, have the "pass through" business loos
by acomjean 7y ago
My understanding is "losses" is kinda vague if you own one of these "pass through" entities you can pay yourself a salary, have the "pass through" business loose money then pass that loss off against your personal income. I'm not a accountant so I might be wrong.
I know a CPA and they have noted that there have been calls from wealthy clients looking for loopholes to save money on taxes, based on the stimulus.
Money not payed in taxes isn't quite the same as getting it back, but in the end its a fair amount of money kept by an idividua and not being sent to the government . Seems kinda shady to me, to put something like this in a bill that's trying to help lower to moderate income individuals financial survive a pandemic.. But I'm old and cynical.
- lend000 7y agoI believe if you elect to be a pass-through LLC (eligible for this rule change), you cannot pay yourself a salary in the same way as if you were a non pass-through LLC or S-Corp. It isn't as easy to cheat the system as most people think, but there seem to be more opportunities to finagle things the more assets you own. The fundamental way our tax code is broken is not loopholes, but the actual publicly known tax bracket rates. They should be higher for capital gains, the progressive rate graduation should be steeper, and 500k shouldn't be the highest tax bracket when there are people who make 10,000 times that in a year. It's unbelievable that this isn't the focus of the issue and people are instead harping on wealth taxes and loopholes.
- clairity 7y agoyes, please. sign me up for all of the above. let's get a fairer, more dynamic economy that discouraging rent-seeking and encourages risk-taking and innovation. wealth concentration is a symptom of a broken, plutocratic system, not a capitalistic one.
- joking 7y agoI would love that, how rent seekers leech the system is not fair.
- einpoklum 7y agoConcentration of wealth characterizes all Capitalist economies - limited concentration as a pre-condition, and an increasing degree of concentration as an ongoing phenomenon and consequence.
- clairity 7y agoyes, i should have been more specific that i meant the excess levels of concentration we see in many so-called capitalistic economies. edit: should also note that capitalism expects wealth concentration, but it's not a pre-condition.
- JamesBarney 7y agoS-corps are pass through entities.
- mNovak 7y agoI thought the benefit of pass-through entities was the opposite--push through what would otherwise be salary as lesser-taxed (no FICA) profit? If your company has $100k to play with, paying $200k salary to take $100k loss is not a good move.
- JamesBarney 7y ago> My understanding is "losses" is kinda vague if you own one of these "pass through" entities you can pay yourself a salary, have the "pass through" business loose money then pass that loss off against your personal income. I'm not a accountant so I might be wrong. Say your pass-through entities has 100k in revenue. You could pay yourself 140k and mark down 40k of losses but that's financially disadvantageous because you're tax rate on the income will be higher than the tax rate on the losses. You're paying 13k in extra taxes to avoid paying 8k, donating an extra 5k to the IRS. Most companies try to shift revenue from income to profits because it will reduce your total tax burden.