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I am a used car dealer and am looking to take my monthly profits

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and use that as a...
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: 8 years ago.Category: Tax
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Answered in 7 hours by:
9/1/2009
Tax Professional: jgordosea, Enrolled Agent replied 8 years ago
jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
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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
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
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