22 May 2025, 06:04 [ UTC - 5; DST ]
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Post subject: Re: Aircraft inventory levels are critically low.  Posted: Yesterday, 18:07 |
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Joined: 05/23/13
Posts: 7927
Post Likes: +10263
Company: Jet Acquisitions
Location: Franklin, TN 615-739-9091 chip@jetacq.com
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Username Protected wrote: What if I pay cash because I have a windfall and want a deduction? I just won $1M in the lottery and I’d like to have a $1M deduction from an investment in a good project that has $1M in capital costs.
The only reason I can’t get the deduction is tax laws that promote borrowing. No, you can't deduct business expenses from lottery winnings period. Well, you can deduct them but it won't go well for you and your account if you are audited.
But, he can take his $1M and invest it in the business...
The best thing about this string of this current thread is I now understand why my CPA doesn't get it.
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Post subject: Re: Aircraft inventory levels are critically low. Posted: Yesterday, 18:57 |
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Joined: 05/01/14
Posts: 9294
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Location: Операционный офис КГБ
Aircraft: TU-104
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Username Protected wrote: But, he can take his $1M and invest it in the business...
The best thing about this string of this current thread is I now understand why my CPA doesn't get it. Are you sure your CPA is the only one who doesn't get it? FYI, he can't take the $1M and invest it in his business. He can only take what's left after paying taxes and invest it in his business.
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Flight suits = superior knowledge
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Post subject: Re: Aircraft inventory levels are critically low. Posted: Yesterday, 19:17 |
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Joined: 05/23/13
Posts: 7927
Post Likes: +10263
Company: Jet Acquisitions
Location: Franklin, TN 615-739-9091 chip@jetacq.com
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Username Protected wrote: But, he can take his $1M and invest it in the business...
The best thing about this string of this current thread is I now understand why my CPA doesn't get it. Are you sure your CPA is the only one who doesn't get it? FYI, he can't take the $1M and invest it in his business. He can only take what's left after paying taxes and invest it in his business.
Only because this specific example of “lottery winnings” means that the federal taxes would be withheld. But I think what Jim was saying is if he had an unexpected windfall netting him $1 million, I don’t think he specifically meant from the lottery.
Here’s a real world example when I was 19 years old, we received $60,000 for the rights to a TV movie, so I invested part of it in a new business. I don’t recall the exact numbers, but it seems to me that I could expense up to $10k immediately. That really knocked down my tax liability that year.
If his $1 million came from some other source, he could definitely use those proceeds to buy an airplane and limit his tax exposure.
Remember that in most cases money is fungible. If I make $100,000 bonus in the oil business, and then I make $100,000 investment in Jet Acquisitions, it doesn’t matter where the money came from.
My point being other than the unusual lottery example where taxes would be withheld, typically we have income, and then we have the ability to invest that to offset taxes.
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Post subject: Re: Aircraft inventory levels are critically low. Posted: Yesterday, 20:44 |
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Joined: 05/09/18
Posts: 1061
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Location: Tucson, AZ
Aircraft: 1980 TR182
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Mike C's position is not without support: https://taxfoundation.org/blog/us-tax-i ... investment. As the authors succinctly state, "Even if it were realistic to perfectly calculate and apply economic depreciation, such a system would still understate business costs, overstate business income, and bias the tax code against capital investment compared to full expensing. Any delay in taking deductions ignores the time value of money, distorts the cost of capital, and reduces economic output."
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Tucson, AZ (KRYN]
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Post subject: Re: Aircraft inventory levels are critically low. Posted: Yesterday, 22:25 |
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Joined: 12/03/14
Posts: 20028
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Company: Ciholas, Inc
Location: KEHR
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Username Protected wrote: You just said it…the CEO uses financing because it aligns with tax laws. Depreciation is DESIGNED to encourage loans. It basically forces it because you have to pay taxes on money you don't have. Mike C.
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Email mikec (at) ciholas.com
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Post subject: Re: Aircraft inventory levels are critically low. Posted: Yesterday, 22:33 |
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Joined: 12/03/14
Posts: 20028
Post Likes: +25072
Company: Ciholas, Inc
Location: KEHR
Aircraft: C560V
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Username Protected wrote: the rest is just nonsense because you have your own idea of what profits are My definition of profit is money in minus money out. I think you will find that is a very common and general definition used by many. Quote: There is no phantom income being taxed. Really? How does someone spend $1M for a rig, take in $500K, lose $500K in that year, and make a "profit"? That's bogus. You are taxing the taxpayer on the basis of the unrealize value of equipment they still hold, but they can't "pay" their taxes with that. Quote: You only pay tax on the gains when you sell. Not in the rig example. You paid taxes the first year on the basis that machine was still worth $900K. You ARE being taxed on its "value" despite that not being actual money. Quote: FYI, a CFO of a profitable company wouldn't be using more expensive equity to buy the drill. In the real world it is leased or financed with low cost secured debt and the cash flows are more closely aligned with the depreciation, real and tax. In other words, bankers make more from this scheme and the business has the additional expense of loan interest. Depreciation is setup to favor banks. Where else are you going to get the money to pay for your taxes on profits you don't have? Mike C.
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Post subject: Re: Aircraft inventory levels are critically low. Posted: Yesterday, 22:45 |
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Joined: 12/03/14
Posts: 20028
Post Likes: +25072
Company: Ciholas, Inc
Location: KEHR
Aircraft: C560V
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Username Protected wrote: No what I am saying is the concept of depreciation exists because governments want to limit people's ability to game the system If you are taxed strictly on dollars in and dollars out, there is no "gaming" the system. If you get a $1M windfall, and buy a $1M business asset, you have zero profit because you netted zero dollars in your pocket. But someday you sell that equipment and then taxes are due. You can't escape it. Meanwhile, the equipment makes you money in following years and you pay taxes on that profit. But you got a fair expensing of the asset, in today dollars, not one that is devalued in the future. Mike C.
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Email mikec (at) ciholas.com
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