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> Instead of selling it to potential customers, they destroy the cupcake and claim it was a tax-deductible expense But isn’t that thing actually common practic
by krisoft 3y ago
> Instead of selling it to potential customers, they destroy the cupcake and claim it was a tax-deductible expense
But isn’t that thing actually common practice? If a bakery accidentaly ruins a batch of cupcakes they toss them to the bin. And of course the ingredients and labour involved in those cupcakes will count as an expense. They had costs (some flour, some eggs, some employee time) and they had zero income from those burnt cupcakes (or even worse, costs associated with cleanup and disposal!).
When you put it this way it sounds quite ordinary. Do you think I should take away some different message from your analogy?
- troupo 3y agoThat's why analogies are always wrong :)
- fzeroracer 3y agoThe failure in this analogy is that it's not the baker tossing away the cupcakes, it's a tax accountant in the background. A baker creates a batch of cupcakes. They're about to sell this batch to a customer, but then the tax accountant comes in and tells them to toss the batch because the customer might not like them. So the batch gets binned, despite neither the customer or the tax accountant having tasted any cupcakes. Then they write that off as a business expense.