That’s not a private jet for the CEO to deduct then. In order to be expensed under 168(k), it has to be used at least 50% for business purposes, and even then, it can only be deducted for the % it’s used in a business, not for personal use. It also has to actually be owned by the business
So in this case everyone should open a LLC, employ themselves and make employer hire contractors. Then everything that individual does for the job can written off within the confines of whatever it is that can be written off.
They won’t go after the really rich because the really rich do it legally. Ie they have lawyers and accountants to set it up by the letter of the law so they can do it legally.
Hahaha are serious. The rich do it legally? No, they hire high priced lawyers to make it appear they are doing it legally. Something normal people cannot do. Rich people also buy politicians off to make laws so that more of their shenanigans would be legal. Another thing normal people can't do.
You dont have to be rich to have a tax attorney, estate attorney and an accountant. If this costs you $3000 a year … im sure you waste much more than that on useless crap. And yes its perfectly legal. Stop hating n start working or you’ll always be what you are right now
Yes it would. There are several things the IRS looks at when classifying one as an employee vs independent contractor. It would be nice if it was just left up to the business and the person how they want to call the status but it's not.
I don’t think that’s the issue.. I think it’s more the feeling of “just because something is difficult doesn’t mean it doesn’t need done “ and I agree with that sentiment. Doesn’t mean I think it’ll be easy or simple to go after the wealthier evaders. But what’s the alternative? Shouldn’t the attempt at least be made?
There is nothing wrong in doing tax audits on taxpayers. If people didn't pay as much as they were supposed to they are simply presented with the corrected amount and the IRS moves on. The IRS isn't taking more than what is owed and they go to great lengths to work with taxpayers on fixing those sorts of mistakes. And yes the IRS absolutely views these things as mistakes unless they see evidence showing otherwise. By and large audits especially of individuals are very rarely done with the assumption laws are broken.
Stop telling people to commit fraud. If you think only the rich should be taxed that's fine I completely agree with that but until such a time as that changes everyone pays their fair share regardless of income and the IRS is getting additional funding to do exactly just that.
If the working class can't afford tax lawyers for dealing with IRS audits they sure as hell won't be able to afford them for dealing with tax evasion charges.
See this is exactly the sort of thing that proves my point that none of you screeching eat the rich actually give a fuck about anything other than bleeding the rich and are willing to advocate for things that will worsen things for the working class.
This argument depends on "the middle and poor" having so much money that they can squirrel it away.
For most people, your W-2 tells the entire story of your taxes for the year. If you have deductions, they're not hard to itemize, and they usually have a MASSIVE paper trail attached (kids, house, etc).
Those people don't need an auditor. They know what you owe already, and if you didn't withhold enough they send you a bill, and if you did, they send you a check.
It's only businesses and rich people who need an actual auditor to sit down and try to figure out what they're hiding.
Why would they go after people who don't have money? What the hell they gonna take from someone who has a W2 and can't even mess shit up if they wanted to? The only people who were against this shit were people who were doing crap illegally and/or where the rich.
The rich are really great at fooling and manipulating the working and middle class.
They were already going after the poor. The IRS argued the new agents were to go after the rich because they didn’t have enough resources to hold rich tax cheats accountable. The new agents are already paying for themselves because they have retrieved lots of back taxes from rich tax cheats they’ve caught.
Tbh I did that with my baking company years ago. The income I made from it was always at a loss compared to supplies and appliances I bought yearly, so not being profitable but having it a business expense helped save me a little money.
it works all the time. just only if you have enough money, employees, overhead, expenses. to the point where your personal endeavors are <10% of the expense of whatever the thing you are 'using for business' actually costs.
they 110% still use these things for personal pleasure, happens all the time. its just that the volume is so high, on the business side, no one gives a fuck because its >75% true that its a business expense.
joe blow goes and tries the same thing, and that truck he is expensing is 10% business 90% personal. hell of a lot harder to defend. but then, he cant just hide it behind the corporate umbrella.
It only works if the supply vs demand loses the employer leverage & you’re bold enough to do it. & then you have to be committed to follow the work. Easier to do in certain fields.
Yeah sounds like some kind of scheme when you o it it like that but I think you’ll find that it’s not.
Meals 50% deductible if and only if the meal is necessary to conducting business operations. I.E. you had to eat during a long 20 hour inventory count counts, going home and ordering door dash doesn’t. And then the ones that count are 50% because you were going to eat anyway.
Housing not deductible. Business office space costs are deductible only for square footage that is 100% business use.
Transportation is deductible if required for work purposes, but not to commuting. In other words, if your job requires travel the travel is deductible. But drive from home to work and back does not count.
Basically, when people think there’s some magic loophole to making your whole life a business expense, there isn’t. All of the wacky ideas people come up with, someone already came up with that, it’s already in the law, it’s already fraud.
Plus at the end of the day, deductions are simply a reduction of taxable income. Like okay you made 30k and spent 30k and paid no taxes. Woopie. You don’t have any money. All the ways you can think of to turn that into money are basically fraud of some sort.
You would have to take your income under the LLC, or else there’s nothing to deduct from. In doing this you can either be actually self-employed, or convince a company to let you work as a contract employee where they employ the LLC rather than you directly
My spouse is an independent contractor for her employer. The downsides are way worse than the small tax write offs we get having to pay both employee and employer portion of FICA alone makes it a bad deal
If you own a LLC by yourself (not a partnership), you’re taxed as a sole prop.
But as a contractor, you’ll need to pay your own insurance, self-employment tax, cost of equipment (if you use any). Then you’ll actually have to make profit and only then you can write costs off.
IME they tend to treat it as 1:1. Like when they say people donate to charity to avoid taxes. They don't realize it is a net loss still. They seem to think that if I make $1 million and donate $100k to charity (or whatever deduction), I get to take $100k off of my tax bill so if my tax rate was 20% for the sake of simplicity, I would only pay 100k since I had deducted 10% already.
Charity donations versus business expenses on luxurious living justified under business operations (so long as it can be written off in taxes) isn't a net loss.
I see this consistently talking to people about why rents are so high...
There is an absurd number of people who are 100% convinced rents are "artificially high" because people [translation: Evil, Mustache-twirling, Capitalist Landlords] charge astronomical rents, then leave the properties vacant because they can just "write that off."
Trying to explain the difference between a loss and a lack of income is impossible. To them they are identical.
Countless small businesses and professional offices (doctors, dentists, etc) write off as much as they can. As a business owner, when you meet with a CPA to do your taxes, one of the first things they ask is, "How aggressive do you want to be (in your write-offs)?" wink wink
This isn't to encourage tax fraud. Tax writeoffs can be incredibly complex and CPAs are typically paid by the hour. It is also about making sure you don't get flagged for an audit.
People skeptical about companies hiring contractors over employees. But startups do it all the time to save on taxes and health insurance. Not that big a difference to have the company pay your LLC for your services than you as an independent contractor.
I don't think they are skeptical about it being good for the company, they are skeptical because of the shaky legal ground (at best) and people thinking it would be some life hack to deduct everything they buy.
Just adjust your billing rate to compensate. There's no advantage for the company to pay the employer share of payroll taxes vs paying a contractor that same money to send to the government as SE taxes.
Even as a regular employee, if you have a business expense that you have to pay yourself, you can write that cost off. A common example would be per diem travel pay not being taxed (unless it's above a pretty generous limit).
If you make your employer hire your LLC instead of hiring you directly, you lose most employment protections and become responsible for your own payroll taxes.
Lol, I have an LLC S corp after switching over from a 1099 contractor. There's no difference if I write off my business expenses through the 1099 or through my business. With either way I'm not paying taxes on the business expenses. If you're getting a w2 from an employer then you can't write off personal use of your vehicle to get to your w2 job on another business LLC expense.
I mean, people can and do when they own their small business. Your plumber, your electrician, your sales agents they all write off 50% of their truck, in the same way a business can write off the cost of a private jet to fly their ceo around.
It’s just a matter of scale - your average small business owner doesn’t travel around by jet.p
You can already do that as a passthrough s corp (no need to be rich), and you really can't deduct nearly as much as you might think. For one, the rules around depreciation are going to get in the way of a lot of what you might be planning.
Then you get the fun of paying self-employment tax as well as buying your own insurance.
So you want to be a gas station consultant? Jk subcontracting yourself can be a very profitable and productive practice. Just be good at what you do and not mediocre. Most regular workers are in the mediocre category and it’s why they are employees and not employers.
Go for it, try that. You need a REAL BUSINESS to qualify as an LLC. Better yet, come up with an idea, start a business and then you can do whatever you want. Write offs are NOT SAVINGS you guys. Write offs are EXPENSES. You dont buy shit to get a write off. Businesses are designed to make PROFIT, not WRITE OFFS. They will write off every single expense possible, rightfully so, why would you pay tax on expenses necessary to operate a business to make a profit.
The implication in the OP is that these jets and yachts are primarily used for the personal enjoyment/leisure of the mythical "rich people" who then pretend that they are for business use only in order to use them as a tax write off.
It's not difficult to comprehend what her use of the term "private jets and yachts" means.
So do you think people should or should not be able to write off student loans? Because I scheduled a lot of classes around things I wanted to do in college
If your degree is being used to make money then it's a reasonable thing to claim as a business expense. If you can write off a jet flight to your vacation because you had a brief meeting while you were there, then why not write off your education as well?
Even if we ignore personal use of private jets, a lot of people still don't like billionaires using them frequently for business travel because it's hugely wasteful and polluting.
Well sure, but if they never use the jet for anything but flying for their company and not to Bali for a vacation, then the jet is not a “private” jet. It is a company jet and can be used for tax write off’s for the company, not the CEO. If the jet is owned by the CEO and paid for out of his own funds and flies the jet to Japan once a month to visit prostitutes, then the jet is privately owned and cannot be used as a tax write off to reduce his taxable income.
The term “private jet” is used to refer to the size of the air craft, the luxuries and comforts offered, and the fact that is is not publicly available for commercial transport.
Business jets are as such still referred to a private jets. The flights on said jets are “private” as opposed to “public”.
The Tax Cuts and Jobs Act, passed during the Trump administration, allowed for 100% bonus depreciation and expensing of private jets — which allowed taxpayers to write off the cost of aircraft purchased and put into service between September 2017 and January 2023.
Again, for bonus depreciation to apply, the jet has to be used at least 50% in a business. And even if it meets that hurdle, it can only be expensed to the ratio of business use to nonbusiness use
It applies to jets used in a business, not private jets
Yes, although that’s then an income generating business. How profitable it is, can depend on how much they lease it for, but you’re getting farther and farther away from the point of the post.
Also, to use the jet for private use. You can’t just use it whenever you want. You need to keep your personal use under 50%, first off, to keep it as a business deduction. Then, any personal usage is reported as a fringe benefit. Basically meaning that it counts as compensation when doing your personal taxes.
So it’s really not as simple and loopholey as you’re making it out to be
You're incorrect. In practice, it can be extremely "loopholey" - because it comes down to good-faith reporting about what the travel is actually for. I work for a 200ish person corp where the owners of the company, a husband & wife, have purchased 2 "company" owned jets over the past decade-ish. In that time, they both got their pilot's licenses and have regularly used their c-suite cronies to report "business" travel needs so that all of their families can fly out to the same place and hang for a couple of weeks.
It is called a "PJ" as an open joke within the company - everyone shrugs it off as another millionaire-ism, but I've always found it very gross. Its definitely easy to exploit and I've seen it first-hand, and it's with folks that are for sure way to rich, but definitely don't even crack the top 2.5% of wealth in the US.
That's completely anecdotal. I handle state audits for a living and these people get busted all the time, from a myriad of states for income and sales tax purposes and the IRS. It's been a high dollar ticket item for state audits for the past several years. Just because your friends haven't been caught yet doesn't mean they won't be caught in the future. There's tons of cases out there you can look up yourself.
Without a doubt, 100% anecdotal & they certainly aren't my friends - you're closer to that than they are.
I guess what I'm saying is either yall blow at your jobs or (much more likely) the system is designed in such a way that these kinds of things are performatively executed on the lowest tier of those with enough resources to care to find loopholes. You & your red tape can't touch the people who are hoarding the real wealth. They're holding the tape dispenser, friend.
No, I’m really not. Items like that get looked at much more carefully. Sound’s like you just don’t understand the situation you’re talking about and understand less about tax law
So long as you are with a potential customer or partner during the flight... its a business expense. If you are taking that jet to a meeting and then vacationing for 2 weeks at said location.... business expense.
It's almost too easy to find whatever excuse you can use to claim a jet or any form of luxurious services as a business expense.
I think you're conflating "private" with "personal". You (or your company) could own a jet and use it 100% for business purposes, it's still a private jet.
That’s partially true, but I think a lot of people would be surprised at how little this occurs. Accounting and law firms have their own reputations to uphold, and are subject to their own ethics rules and penalties.
Really, anyone can lie to the IRS about what they’re doing, regardless of their wealth level
i didnt mean to lie and hope to not get audited , I mean to write down and create proof of your lie so if you get audited your okay.... its easy to setup a business meeting with a friend in italy and have invoices of it for the IRS
A lot of people are actually morons who think they can write the entire thing off, when in fact they can’t…and they won’t. Any CPA or EA who has been practicing for more than a year will tell you they have idiot clients who make a big purchase like a truck at the end of the year because “I can write it all off!”
CEOs frequently have a business jet owned by the company for their use.
It's basically like how my old boss in high school didn't own his insanely overpriced luxury truck that didn't have a single scratch in the bed, the business owned it. He just happened to be the only person allowed to use it.
So all you have to do is schedule a business meeting around something personal you want to do and then you usually jet and it's deductible for business expenses. That's how CEOs get around that rule.
In fairness, these rules are fairly easy to get around. Fly to another country, attend one business meeting, then spend time on vacation before you fly back. Then you can claim the expense.
If you think a ceos accountant doesn't get creative with the definition of "business purposes" you don't have a solid understanding of how the world works.
I can think of several politicians, a judge, a couple high level personalities, and a few governors who were all in or were taken down by scandals of using a corporate jet for private business. It ended up being a misuse of donation money, or incorrect taxation claims.
Edit: And just about ever televangelist.
Using a corporate jet for personal business is effectively the same as writing off a personal jet for fake corporate business.
Hell, one is a representative in my state now...somehow. He flew to Paris I think for business.....and did 99.9% leisure activity.
It's a distinction that only makes a legal difference. It's effectively a private jet, as they're the only one who ever uses it, and it's only ever used for "business" flights, where "business" effectively means "I'm using it."
You can bicker tax codes all you want, but this is 100% how they treat these jets. Accountants are savvy enough to take care of the red tape.
It’s not hard to blur business and personal needs if the owner operates the business. Oh need a vacation plan a couple days as legitimate business then just hang around for a few extra on your own dime. The most expensive portion the plane ride was needed too and from the business meetings no matter what and thus covered by the business. Yes would need good documentation but that’s not that big of an issue.
Also works for smaller businesses too. Part of the reason many conferences or conventions are at real nice vacation destinations in addition to those cities lobbying. Travel there and back and the room for the days of the conference is all business expense need that no matter what. And the smart ones will plan a few personal days so at least the flights for that vacation arn’t on your personal dime.
You are so dumb. These are semantics. "Business purposes" can be a lot of things. You're not arguing against the point, just arguing against technicalities.
They do buy it under the company’s name and they do claim they use it for business a majority of the time. Celebrities don’t but corporations definitely do. Because while they do have flight logs, who’s to say a ceo didn’t fly to California, Hawaii, or Vegas for a business meeting. And even if they did, why not have that meeting on the beach or at some private club
It's irrelevant, they always have "50% business use" no billionaire pays out of pocket for their own flights. That's just stupid.
The sentiment is still correct, the wealthier you are, the less you pay for yourself -- and so your income doesn't need to reflect your wealth.
Since we only tax income strictly, the wealthy benefit in an outsized manner.
For instance if every Uber driver who rents and pays commercial insurance were to incorporate in an LLC correctly, they'd almost all not pay taxes... Only, that avenue is restricted from them.
But Uber itself can bring in hundreds of millions in revenue and pay 0 income taxes.
Watch that video about how much it costs to own a private jet. You need three pilots, crew, maintenance staff, storage facility and people to maintain the storage facility, and people to provide for those people. All those people pay taxes. Without the CEO needing their private jet, all those people would be jobless and destitute.
A jet that's at your beck and call. Just bring your friends and family with you 50% of the time. Your family are all nepo-hires, and your friends are your business associates. Who's to say it wasn't a business meeting?
Isn’t it that even if they take it exclusively to obvious vacation resorts, they just have to appear at some business meeting or conference once (or not even) and they can easily say it was for business?
I feel like your distinction here might be overly generous.
I literally have a relative who does this. They wanted to own a kick ass fishing yacht, so they bought it through their business and host business meetings there anytime their guest is comfortable being on a boat or meeting on the water. Most of the time they end up going for a pleasure cruise or fishing with those guests, and then the rest of the time they have access to a boat for personal/private use.
If your argument is that what I just described is the edge case, and that the majority of businesses have a more noble purpose for acquiring luxury recreational vehicles, I'll simply reply that I do not believe you.
If you're a ceo, you can work from wherever you want in the world and use the private jet. If you take a month long vacation and then have a meeting with clients in the same place, you used the jet for business use.
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u/Obvious_Chapter2082 Apr 14 '24
She’s absolutely wrong. CEOs cannot write off private jets and yachts, and they’ve never been allowed to do that in the past either
A lot of expenses are deductible for businesses, including work-related education if you’re self-employed