70% TAX? Marijuana profits up in smoke under IRS rules...

[Wilikon]

http://www.usatoday.com/story/news/nation/2014/11/03/irs-limits-profits-marijuana-businesses/18165033/


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And they thought 0bama and a BIGGER government were going to save them from the evil pro private business politicians 

[Spendulus]

Say gross profit was $100, IRS-allowed expenses were $10, IRS-not-allowed expenses were $50.

IRS would compute tax based on $100-10 = 90.  If tax was 30%, $27 in tax.

Actual net profit was $100-10-50 = $40.

Less $27 in tax gives $13 to take home.

If the IRS had done it right, tax on the $40 * 30% = $12 and the take home would be $40-12 = $28.



So yeah, I agree with the total unfairness of this IRS interpretation.

[TheButterZone]

"The power to tax is the power to destroy" - Chief Justice John Marshall, in McCulloch v. Maryland

[Gumbork]

Say gross profit was $100, IRS-allowed expenses were $10, IRS-not-allowed expenses were $50.

IRS would compute tax based on $100-10 = 90.  If tax was 30%, $27 in tax.

Actual net profit was $100-10-50 = $40.

Less $27 in tax gives $13 to take home.

If the IRS had done it right, tax on the $40 * 30% = $12 and the take home would be $40-12 = $28.



So yeah, I agree with the total unfairness of this IRS interpretation.

Regardless of how unfair the tax treatment the marijuana tax laws are, it is still very profitable to sell marijuana legally as the margins are the shops are sky high

[jabo38]

Say gross profit was $100, IRS-allowed expenses were $10, IRS-not-allowed expenses were $50.

IRS would compute tax based on $100-10 = 90.  If tax was 30%, $27 in tax.

Actual net profit was $100-10-50 = $40.

Less $27 in tax gives $13 to take home.

If the IRS had done it right, tax on the $40 * 30% = $12 and the take home would be $40-12 = $28.



So yeah, I agree with the total unfairness of this IRS interpretation.

Regardless of how unfair the tax treatment the marijuana tax laws are, it is still very profitable to sell marijuana legally as the margins are the shops are sky high

I agree. And legal win high taxation is way better than illegal so I'll take that for now. Maybe it's not perfect but it's definitely going  the right way.