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If you spent your 20s making money, little or no, you didn't have losses. If you spent your 20s conducting losing trades in the stock market, you accumulate ca
by valuearb 6y ago
If you spent your 20s making money, little or no, you didn't have losses.
If you spent your 20s conducting losing trades in the stock market, you accumulate capital gains losses that you can only apply $3,000 per year against your regular income. If at age 30 you made $800,000 in capital gains you are able to apply all those unused losses against those gains.
So "human beings" aren't much different.
- skybrian 6y agoA difference is that just about everything a business spends money on is a business expense, while many of the things people spend money on aren’t treated like business expenses. Travel is an example where buying exactly the same thing can have very different tax consequences depending on whether it’s considered for business or not. To some extent this is made up for with the standard deduction and various other deductions, but you can’t carry it forward if you made less than the standard deduction, even if you actually are spending more than you make. The idea of carrying forward losses is unintuitive to most people because we mostly don’t get to do that.
- valuearb 6y agoPersonal expenses are just that, personal. While some have a limited effect on your ability to earn a living, most are just consumption. Business expenses are almost always only the costs of actually generating revenues. Thats why there are strict limits on travel & entertainment deductions. Of course there are always exceptions, does the company need that private jet? But their accountants have to justify private jets, etc to ensure the company doesn't face tax fraud charges.