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Seriously, does this work?

Topic closed. 4 replies. Last post 8 years ago by Piaceri.

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Entertaiment Capital
United States
Member #37800
April 19, 2006
302 Posts
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Posted: March 19, 2009, 1:46 am - IP Logged

 Let's pretend that I won $14 millions as cash value. I pay $4millions for tax.

 Then I set up my own real estate management firm and buy properties through my management firm, as the source of income. So technically the expense to buy the properties are business expense.

 Then can I use them as a tax write-off? Seriously, I won't be surprised if people like Trump use this trick every year.

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    Kentucky
    United States
    Member #32652
    February 14, 2006
    7314 Posts
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    Posted: March 19, 2009, 3:52 am - IP Logged

     Let's pretend that I won $14 millions as cash value. I pay $4millions for tax.

     Then I set up my own real estate management firm and buy properties through my management firm, as the source of income. So technically the expense to buy the properties are business expense.

     Then can I use them as a tax write-off? Seriously, I won't be surprised if people like Trump use this trick every year.

    Where you got the money to start the firm is irrelevant but I do have a lottery relative answer.

    The IRS allows us to deduct up to the amount we win as expenses. For instance if you won $10,000 on a scratch off that becomes gambling income and if you had $10,000 worth of losing tickets, you can deduct it as gambling losses. Sounds easy but if you're called in for an audit, you have to prove you actually bought the tickets and they didn't come from dumpster diving.

    It would be nice if all of us could deduct our gambling losses as expenses from our other incomes but we can't because its not related to how we earned that income. That's why we can only deduct up to the amount we won.

      savagegoose's avatar - ProfilePho
      adelaide sa
      Australia
      Member #37136
      April 11, 2006
      3300 Posts
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      Posted: March 19, 2009, 5:55 am - IP Logged

      a company is a seperate tax entity.

      2014 = -1016; 2015= -1409; 2016 JAN = -106; FEB= -81; MAR= -131; APR= - 87: MAY= -91; JUN= -39; JUL=-134; AUG= -124; SEP = -123; OCT= -84  NOV=- 73 TOT= -3498

      keno historic = -2291 ; 2015= -603; 2016= JAN=-32, FEB= +12 , MAR= -86, APR = -77. MAY= -48, JUN= -29, JUL=-71; AUG = -52; SEPT= -43; OCT = +56 NOV = -33 TOT= -3297

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        Entertaiment Capital
        United States
        Member #37800
        April 19, 2006
        302 Posts
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        Posted: March 19, 2009, 7:44 pm - IP Logged

         But business owners use business expense for tax write-off. Maybe I should claim the prize as an LLC?

          Piaceri's avatar - sarsony1
          Republic of Texas
          United States
          Member #57557
          January 9, 2008
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          Posted: March 19, 2009, 8:26 pm - IP Logged

          Actually, if you buy investment real estate property, like rent houses or strip centers, ordinarily you can write off the cost of that property (called depreciation) over the life of the property - 31.5 years is the last number I remember hearing. Some property can be written off directly through what the IRS calls a section 179, but I am not clear on whether it applies to real estate.

          You have to consider, too, that if you are buying this property as investment property, you will need expenses to offset the income earned from that property. Many times you can have positive cash flow, but negative taxable income on rental property mostly because of depreciation. Thus the appeal of real estate investment. The down side is that when you sell that property later, you have to "recapture" the depreciation through the tax on the gain on the sale - assuming you have a gain - something that is no longer a guarantee these days.

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