Capital Gains

Off Topic Politics & World Issues
61

[quote]pittbulll wrote:

[quote]countingbeans wrote:

[quote]pittbulll wrote:
Another senario . I buy $100,000 in cars and fix them all sell them for a $1,000,000

I buy a piece of land for $100,000 and fix it sell it for a $1,000,000

everythinhg is the same finacialy . I am curious would I pay the same taxes on both business deals and why ?[/quote]

Depends on what you do for a living. If these activities are how you make a living they are ordinary income. If you are otherwise a carpenter, you may pay capital gain rates.

I believe the car is going to be ordinary more often than not, and the land capital more often than not. But I’m making an educated guess, as each individual situation will effect the sales treatment.[/quote]

let’s say they are both carpenters and let’s throw in a day trader (who is a carpenter as well) that makes 900 thousand profits day trading
[/quote]

Well, all three would be taking an aggressive position calling the car sales capital gains in my opinion. Cars just aren’t typically seen as appreciable assets so the sale of them for profit is going to get ordinary income treatment.

But hell, you might win under audit. I’ve seen stranger things happen.

The land would be capital gains for all three.

I know where you are going with the day trader comment. The “day trader” is going to pay long term rates on all the appreciated assets he sold that were held for more than one year, and ordinary rates on the appreciated assets that we held for less that one year. And if he lost 900k, he would only get to deduct 3k from his AGI.

62

[quote]pittbulll wrote:

[quote]countingbeans wrote:

[quote]usmccds423 wrote:

[quote]countingbeans wrote:

[quote]pittbulll wrote:
Another senario . I buy $100,000 in cars and fix them all sell them for a $1,000,000

I buy a piece of land for $100,000 and fix it sell it for a $1,000,000

everythinhg is the same finacialy . I am curious would I pay the same taxes on both business deals and why ?[/quote]

Depends on what you do for a living. If these activities are how you make a living they are ordinary income. If you are otherwise a carpenter, you may pay capital gain rates.

I believe the car is going to be ordinary more often than not, and the land capital more often than not. But I’m making an educated guess, as each individual situation will effect the sales treatment.[/quote]

Hey Beans,

Why would a carpenter potentially pay capital gains? I guess I’m asking how you would differentiate between what would be ordinary income vs. a capital gain when the gain occurs on an investment other than on securities?[/quote]

In his examples, what you do to make a living outside those sales will determine how the gains are treated. If you developed land for a living, those gains would be ordinary. But if you and 3 buddies got together and made the investment in land and sold it 3 years later, but all worked for Ford full time, the gains would be capital (investment) gains.

[/quote]

not true , I am a carpenter and have bought many properties and I deduct my wages from the profit line . And pay capital gains on the profit. Why should it be different if it were cars ?
[/quote]

yes, true. The more often you do that, the more aggressive calling it capital gains is.

63

[quote]smh23 wrote:

[quote]ZEB wrote:

[quote]usmccds423 wrote:
To make a point a bit more clear. I believe there is no reason you can’t start on $7.50Hr and eventually make 30K-40K a year. Luck may be a factor in the short term, but in the big picture I believe hard work and yes sacrifice allow everyone an opportunity to earn a “modest” living. [/quote]

I agree with you but will go beyond that. I have a friend who never went to College. Instead my friend kept his part time job that he had at Burger King. After he graduated High School he went to work full time for them. After several years he was so good that they made him a Manager of one of their stores. He had to relocate an hour away but he did it. After several more years of working 50-60 hours a week they made him a Supervisor. And the last time I checked in with him he was making over 100-k per year with Burger King!

Company’s are starving for good people. As more get used to having things handed to them more opportunities are created for people like my friend.

In America you can still be just about anything that you want to be if you work hard and smart enough!

Obama has not wrecked that yet…four more may do it however.[/quote]

I know a couple of people like that too. My best friend from childhood got fucked by circumstance at every turn. His parents ended up as unemployed addicts and he was on his own by 17, working for close to minimum wage at a supermarket. Now he is the manager of an at & t store…he is not rich and he probably will not be, but he has a car and an apartment and he earned all of it the old fashioned way.[/quote]

Which I think is awesome, good for him.

64

[quote]countingbeans wrote:

Well, all three would be taking an aggressive position calling the car sales capital gains in my opinion. .[/quote]

This is my point , what is the difference ?

65

[quote]pittbulll wrote:

[quote]countingbeans wrote:

Well, all three would be taking an aggressive position calling the car sales capital gains in my opinion. .[/quote]

This is my point , what is the difference ?[/quote]

Because fixing cars is an ordinary business activity. Holding and selling, or developing land outside the normal course of business is a capital activity.

Cars aren’t typically an appreciable asset.