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PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4106
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I have a question, we have a business and we expect to end

Customer Question

Hello,i have a question, we have a business and we expect to end with a $800,000 balance in our bank account at the end of the year.1. we import products from China, last year we spoke and visit a chinese factory so they can manufacture a new product, we agreed that if we buy 100,000 pieces we get a special price that 100,000 pieces has a cost of $1,000,000 this year we bought about 30,000 pieces which is about $340,000.00.Now my question is we would have to pay taxes on the $800,000 but at the same time we have this agreement with the chinese company and we have to pay them, so how can we put this on our taxes, do we put this chinese invoice which is 30% paid as account payables?2. We would like to invest in a different business we would need to open a new company and pay a rent and all of the expenses of this new business, if we transfer 200,000 from my company to this new business, is that consider an expense ? or do i have to pay first taxes on the $200,000 and then i can transfer it to the new company.? but at the same time everything is going to be spend on expenses.
Submitted: 1 month ago.
Category: Tax
Expert:  PDtax replied 1 month ago.

Hi from just answer. I'mCustomer I'll assist.

Expert:  PDtax replied 1 month ago.

1. Buying inventory will not reduce your us taxable income. Sellers of merchandise like you must use the actual method, which would not allow you to deduct the inventory purchase.

2. Investing in a new business does not create a tax deduction for the old one. Better to commit those funds to deductible expenses in the new company, like rent, salaries, equipment and the like.

I hope that helps with your tax planning. Positive feedback is appreciated after you review my responses. I'mCustomer

Customer: replied 1 month ago.
What happens if i loose the money? on my new business, do i get a tax refund ?
Expert:  PDtax replied 1 month ago.

Yes you can get a refund for most taxes paid.

Thanks again. Don't forget to rate my assistance. I'mCustomer