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| About tax write-offs | |
| Posted by: tmdonahue 08:51 am EDT 07/11/21 | |
| In reply to: Because Salad Days would have flopped and Charlie Girl would have been a disaster - AlanScott 01:08 am EDT 07/11/21 | |
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| No one wants tax write-offs that are the result of losing money. So, you lost $20,000 on a show. The write-off would depend on your marginal tax rate but might be as high as $7,000. You still lost $13,000 in real money. The tax write-offs that are good are in situations where the tax codes treat income differently than you do. So a common one is rental property ownership. Under the tax code, the building is depreciated, a certain percentage each year is counted as a cost, even though a well-maintained building may actually appreciate in value over time. Once you sell the property, you pay taxes on all the depreciation you recovered in the sale. But that may be at a different tax rate and will be years later. Meanwhile you've had cash to invest. I am not your tax advisor. |
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| re: About tax write-offs | |
| Posted by: ryhog 02:38 pm EDT 07/11/21 | |
| In reply to: About tax write-offs - tmdonahue 08:51 am EDT 07/11/21 | |
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| You are answering a question in the present tense but I assume any discussion of bringing these shows to Broadway contemplated that it would have happened relatively contemporaneously, when the tax landscape was hugely different. Also, regarding rental property (off point but since you offered it), you leave out the fact that passive loss deductions are generally meaningless because of the extremely low maximum deduction. | |
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| re: About tax write-offs | |
| Posted by: tmdonahue 07:54 am EDT 07/12/21 | |
| In reply to: re: About tax write-offs - ryhog 02:38 pm EDT 07/11/21 | |
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| You're right. I assumed in the case of rental property that you would be an active investor, not in a REIT. Rental property was not off-topic 'cause I used it as an example of tax write offs that are desirable. Losing real money affects your taxes, sure, but you still lose money. | |
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| re: About tax write-offs | |
| Posted by: ryhog 09:44 am EDT 07/12/21 | |
| In reply to: re: About tax write-offs - tmdonahue 07:54 am EDT 07/12/21 | |
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| I wasn't intending to criticize you for the example. I just didn't (and don't) want to go off on a tangent. Plus, the mechanics and strategies of passive losses are not susceptible to being understood from a few sentences on a chat board. While it is correct that no one invests in a production to lose, taxes very much factor into one's aversion to losing money. I'll just add one thing which is that investing in a REIT is just one was to participate passively in real estate. | |
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| Hopefully before the 1968 film of "The Producers" spelled it out, folks were looking to make money by producing what they thought might be a hit | |
| Last Edit: PlayWiz 03:13 pm EDT 07/11/21 | |
| Posted by: PlayWiz 03:11 pm EDT 07/11/21 | |
| In reply to: re: About tax write-offs - ryhog 02:38 pm EDT 07/11/21 | |
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| and not trying to find taxably-advantaged ways to finance something they thought might flop. | |
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