Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
Your accountant is correct. Your profits are required to be shown for tax. If and when you invest in the additional property
you can show that as an expense
Sorry about that start
I was typing my response to you and saw you said Hi
so after investing, the income becomes an expense
That is correct
and we have new assets
and I need to pay tax for the asset instead of paying for the income?
You would not pay tax on the asset, it would be an expense then
If purchased it would be an asset to depreciate
And I do not need to pay tax for the income that I already spent
Yes, income is taxable
Let me start with the basics
You sale items that you purchased
Your net (that would be total income less expenses) are then taxable
You decide to expand
The income you already earned is taxable but the new building would be an expense when you purchase it
you would then get to depreciate that new building over years
and against income from teh time of purchase
but not going backward
even on the income you had to get to make the purchase
the new building will assist for future income
is that clearer?
It sounds like you have a good accountant
Can I roll over my tax to the next year
some business can do that (farmers and fisherman)
ok got it :)
thank you for your help
You are most welcome. Your positive rating is always thanks enough.