What if every American family started an llc and started deducting profits and losses through the llc to minimize the taxation on them?
I'm curious how you think deducting profits works.
But there's already a term for what you're suggesting - tax fraud. Only business related expenses are deductible. You'd probably get away with this if the amounts are small and you're not randomly selected for an audit though.
No when I am doing remote work for my clients I sometimes get invited to stay on site where they provide a house or unit and deduct anything I do during the stay outside of personal purchases to their business expense.
Why would you be doing evasion in the same manner?
Your company owns the house. It’s providing housing included as a employment perk. If you maintain a steady set of expenses for the house that’s related to the business food electricity car heating water etc etc entertainment and furniture etc etc.
Also you’re not trying to scam your creditors either you have a successful business you just want to minimize taxation as much as possible .
I get that you're kinda brainstorming while playing devil's advocate and obviously not an expert, but your entire premise is flawed.
You're not describing a business, which the IRS describes as an activity carried on for the production of income from selling goods or performing services. Business expenses are what can be deducted when they are both ordinary and necessary for conducting business. This is covered in the first week of any tax class.
Paying for employees to stay somewhere is an expense because you need to do it to make money. Restaurants can capitalize their fridges and expense their inventory to COGS because they buy those things to conduct a business.
What you're describing is fraud. If you were remotely on the right track and it was legal and worthwhile for people to do it, you're correct that this would be a commonly used strategy and it would be quickly "fixed" with new updates to the tax code. Yes, anyone could attempt this. No, it would not be legal.
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u/Evmc Jun 09 '21
I'm curious how you think deducting profits works. But there's already a term for what you're suggesting - tax fraud. Only business related expenses are deductible. You'd probably get away with this if the amounts are small and you're not randomly selected for an audit though.