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. |
