Renegade
Contributing Member
Cash: $ 6.45
Posts: 29
Joined: 10 Jul 2005
Location: Florida
|
| Dumb question |
 |
|
I came up with this idea when I was in the shower. I don't know if it is possible of legal, so I came to ask here what you think of it. If it would be possible to incorporate as an investment company and then reinvest the money with before pretax income that way you can evade paying taxes.
|
Tue Jul 19, 2005 6:56 pm |
|
|
David Briggs
Senior Member
Cash: $ 57.86
Posts: 289
Joined: 16 Jan 2005
|
No, for two reasons. First: Income is taxable even if not paid out of the corporation as dividends. Second: There is an accumulated earnings tax applicable to investment companies (and personal holding companies, as in this situation) which especially penalizes them if they do not distribute their income as dividends.
The tax man stood in his shower (probably sat in his tub) a long time ago figuring out how to stay one step ahead of you.
~~David
|
|
Tue Jul 19, 2005 7:19 pm |
|
|
David Briggs
Senior Member
Cash: $ 57.86
Posts: 289
Joined: 16 Jan 2005
|
Oh! And never say "evade" paying taxes. It is tax "avoidance" which is the lawful objective.
~~David
|
|
Tue Jul 19, 2005 7:22 pm |
|
|
Renegade
Contributing Member
Cash: $ 6.45
Posts: 29
Joined: 10 Jul 2005
Location: Florida
|
I figured their would be something in my way
|
|
Tue Jul 19, 2005 9:24 pm |
|
|
|
