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jgordosea
jgordosea, Enrolled Agent
Category: Tax
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Experience:  I've prepared all types of taxes since 1987.
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I am a used car dealer and am looking to take my monthly profits

Resolved Question:

I am a used car dealer and am looking to take my monthly profits and use that as a way to loan out money for auto financing (in-house financing). My questions is am I taxed on the profits once they are realized or am I taxed based on my profit and loss statment which is money in and money out- and the money went out because it was re-loaned out?
Submitted: 4 years ago.
Category: Tax
Expert:  jgordosea replied 4 years ago.
Greetings,



Loans do not enter into profit or loss. Neither the money you borrow is counted as income nor the money you lend is counted as an expense.



Only the interest you make (or pay) is counted in your profit and loss.



So, it is not the money in and out that makes your profit; but it is the income less the expenses that is your profit from which the tax is computed. You will not count the money you loan out as an expense and you will not count the principal paid back as income either.



Please ask if you need more assistance.

Best wishes.
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3004
Experience: I've prepared all types of taxes since 1987.
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