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View Diary: Boehner just shot himself in the foot (170 comments)

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  •  Sorry, but you are wrong. (0+ / 0-)

    A capital investment is not tax deductible. Only actual expenses are deductible.

    Example
    Mary starts a business. She contributes 100,000 to the business, in cash. She uses 50,000 to buy inventory, and sells it for 60,000.

    The 50k spent on inventory is deductible against the 60k in revenue. The other 50k, from the capital contribution, is not.

    •  Capital expenses are depreciated (2+ / 0-)
      Recommended by:
      NoMoreLies, happy camper

      so they are deductible over time, there is the Section 179 depreciation that is 139000 for year 2012, that is a ton of capital for a small company, and many items qualify for accelerated depreciation.

      These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel. Abraham Lincoln

      by Nailbanger on Sun Dec 02, 2012 at 11:48:17 AM PST

      [ Parent ]

      •  Capital improvements are NOT (0+ / 0-)

        the same thing as capital contributions.

        •  I am confused on why even talk about (1+ / 0-)
          Recommended by:
          happy camper

          capital contributions.

          Higher tax rates will encourage owners to keep the money earned by the company (not existing equity) in the company or be taxed.
          If you loan the company 100k and the company pays you back 100k, there is no tax liability.  
          But the relevant situation is this:  if your company earns 100k and you take it all out, it is taxable.  If you hire, that payroll is 100 percent deductible. If you lease a new building, deductible.   If you do capital improvements, it is still deductible in that year or as depreciation over a few years.
          If it is a low tax rate you are much more likely to remove the earned capital.  Higher tax rates therefore encourage hiring and expansion.

          These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel. Abraham Lincoln

          by Nailbanger on Sun Dec 02, 2012 at 12:56:51 PM PST

          [ Parent ]

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