Business Question (Tax Breaks, etc)

Tree

Well-Known Member
#1
Disclaimer: I haven't had my coffee yet so this may be a little hazy...

I have heard of people that have corporations consisting of themselves and maybe one other person. They charge out x amount to a client, who pays the corporation, out of which they draw dividends. Furthermore, their corporation pays a lot of their expenses that are related to their jobs (flights, accomodations, supplies, etc). At the end of the year, the corporation is taxed based on how much money is left in its account(s) at a low rate, and then they get all kinds of tax breaks on top of that. This is the way it works in Canada, at least.

Now, in the USA, you are allowed to claim gambling losses up to an amount equal to your winnings (if you win 5000 and lose 10000, you can claim 5000 of your losses), but I'm sure you all know this one.

My question is are you able to have a corporation (say an investment corp or something) whose stake is investing in gambling? Have any of you ever tried this? I'm not versed in American law but it does seem at first glance like something you could make use of in the case that you employ large amounts of money ($100K+).

Again, I have not had my coffee yet and this is something I dreamed up on the way to work. This may or may not be completely ridiculous.
 

Tree

Well-Known Member
#2
Ok I've had my coffee now and while I'm still fairly skeptical of the question I asked, I think it's clear enough that I don't have to edit :p
 
#3
As of this tax year the US gambling tax law has changes a little for the bettor (pun intended). Professionals may now deduct losses and expenses more like a business. zg
 

Tree

Well-Known Member
#4
zengrifter said:
As of this tax year the US gambling tax law has changes a little for the bettor (pun intended). Professionals may now deduct losses and expenses more like a business. zg

Oh, so flights and accomodations could be partially claimed? Forgive me, I'm a Canadian citizen so I don't know how this works in the USA. The reason I was asking about the whole corporation things was because as a Canadian I don't believe I can claim anything, but if my corporation was based in, say, Wyoming, I could get away with more expenses being covered.

Thanks, zg.
 

moo321

Well-Known Member
#5
You could incorporate, either as an LLC or an S corp. As far as the specific tax ramifications, I believe you would be able to write off all of your expenses if you had an expectation of making a profit.

I'm not a CPA or a tax lawyer, though, and I would want to talk to one of those before you actually incorporated for gambling. Or at least do a lot of good research.
 

shadroch

Well-Known Member
#6
What US taxes are you paying that you would write off the plane expenses against? If you are Canadian, why are you paying any US taxes on your BJ winnings?
 
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