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So I can park money in a corporate entity and then use it to buy everything for me? This seems like an amazing loophole. Never extract your cash from a company

So I can park money in a corporate entity and then use it to buy everything for me? This seems like an amazing loophole. Never extract your cash from a company and you never pay tax!

koolba 2y ago
Spending corporate money on non corporate expenses would be fraud. You can’t do that regardless of the tax rate. What this does allow for is carrying over profits from year to year for small businesses that operate on a cash accounting basis. Which in turn allows multi year planning without taking a 22% hit. Never extracting the profits would lock them away in the corporation with no means of spending them. It’s definitely a possibility, but it’s not really an issue for public corporations because the shareholders wouldn’t want a company just sitting on cash.
- delusional 2y ago
  > but it’s not really an issue for public corporations because the shareholders wouldn’t want a company just sitting on What if my company just held on to the cash but every share had some ownership of that cash. Sure, it probably wouldn't trade at par, but it would also be silly for it to trade at the payout rate considering it's non taxable. Could the paper backed by my corporation become a new currency?
  - s1artibartfast 2y ago
    sure, but if you sold any of that paper you would have to pay taxes on it.
- yread 2y ago
  > Spending corporate money on non corporate expenses would be fraud Where does it say that? And what are non-corporate expenses anyway? Keeping the founder happy surely is a corporate expense otherwise this guy would rot in prison https://techcrunch.com/2024/04/01/canoo-spent-double-its-annual-revenue-on-the-ceos-private-jet-in-2023/?guccounter=1 https://techcrunch.com/2024/04/01/canoo-spent-double-its-ann...
- xorcist 2y ago
  Fraud? That would be bizarre. Companies buy sports arenas and private jets all the time.
- me_me_me 2y ago
  Well I can setup a hospitality corporation and also become a client of it. For a price of a $1 I will be cater to.
renewiltord 2y ago
You can't use a corporation for personal expenses. Like, your home can't be owned by the corp. Your child's school bills can't be paid by the corp.

So I can park money in a corporate entity and then use it to buy everything for me? This seems like an amazing loophole. Never extract your cash from a company and you never pay tax!

koolba 2y ago

Spending corporate money on non corporate expenses would be fraud. You can’t do that regardless of the tax rate. What this does allow for is carrying over profits from year to year for small businesses that operate on a cash accounting basis. Which in turn allows multi year planning without taking a 22% hit. Never extracting the profits would lock them away in the corporation with no means of spending them. It’s definitely a possibility, but it’s not really an issue for public corporations because the shareholders wouldn’t want a company just sitting on cash.

delusional 2y ago
> but it’s not really an issue for public corporations because the shareholders wouldn’t want a company just sitting on What if my company just held on to the cash but every share had some ownership of that cash. Sure, it probably wouldn't trade at par, but it would also be silly for it to trade at the payout rate considering it's non taxable. Could the paper backed by my corporation become a new currency?
- s1artibartfast 2y ago
  sure, but if you sold any of that paper you would have to pay taxes on it.
yread 2y ago
> Spending corporate money on non corporate expenses would be fraud Where does it say that? And what are non-corporate expenses anyway? Keeping the founder happy surely is a corporate expense otherwise this guy would rot in prison https://techcrunch.com/2024/04/01/canoo-spent-double-its-annual-revenue-on-the-ceos-private-jet-in-2023/?guccounter=1 https://techcrunch.com/2024/04/01/canoo-spent-double-its-ann...
xorcist 2y ago
Fraud? That would be bizarre. Companies buy sports arenas and private jets all the time.
me_me_me 2y ago
Well I can setup a hospitality corporation and also become a client of it. For a price of a $1 I will be cater to.

renewiltord 2y ago

You can't use a corporation for personal expenses. Like, your home can't be owned by the corp. Your child's school bills can't be paid by the corp.