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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 9720
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Joel Chariton I sent my question to you Started a LLC

Customer Question

Hi Joel Chariton I sent my question to you
Started a LLC corporation 3 years ago 1 person and it is a start up and 3 years ago a investor gave 200,000 dollars. over 3 years 50,000 has been used on expenses. The business has not started operating yet it is still raising capital. There has been zero profit.
The person has said the money is gone and paid out in taxes. I thought taxes were paid on profit and why would you pay taxes each year on a investment?
Submitted: 5 months ago.
Category: Tax
Expert:  Lane replied 5 months ago.
Hi,....I'm not sure I understand you question completely, but you are right....If the business is not yet operating there are no losses that be taken....Now, if the person is saying that he/she believes that the business has failed and will never be profitable, that person CAN take a capital loss on their investment, BUT would no linger be an owner....AND no longer be able to reap any future profits....Once an business owner writes off their investment in the business as a tax loss they are no longer an owner....Could you maybe clarify what you meant by "The person has said the money is gone and paid out in taxes?"...Thanks, I'll be here, and we can go from there....Lane......I hold a law degree, (concentration in Tax Law, Estate law & Corporate law), an MBA, (specialization in finance & tax), as well as CFP and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice, since 1986.

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