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But you don't charge your own company, you buy services from a seemingly external company (that is actually operated by you). That's one way to generate a loss
by kristofferR 14y ago
But you don't charge your own company, you buy services from a seemingly external company (that is actually operated by you). That's one way to generate a loss while actually just moving money around.
- sokoloff 14y agoYou generate a loss for one company, but income for another company. I don't see how this avoids taxes, just moves them from one entity to another. (so if the second entity is in a tax-friendly jurisdiction, it's obvious how that helps, but it doesn't simply generate a loss and that's the end of the story.)
- chii 14y agoBut then the shell company could just be collapsed, and all its debt obligations (which is really to yourself) could be all moot. Thus, you avoid paying tax like that as well?
- beagle3 14y agoSuch tax loopholes might exist (I am not a tax person), but generally the answer is no: If you take a loan, and don't return it for whatever reason (e.g. because the person to whom you owe it has died and has no heirs; or the bank that gave you the loan decides not to collect), the loan you previously received is instantly converted for tax purposes into your income, and you have to pay income tax on that.