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Why would someone start a business for their taxes?
I've heard of people buying businesses that don't produce a profit for tax purposes. Why would someone want to do this?
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For no good reason. Tax law is strange, complex, and full of oddities. Every so often somebody comes up with a so-called "tax shelter" that takes advantage of some real or imagined loophole in tax code. Sometimes people who lose money in certain privileged businesses are able to deduct more than the loss amount because the tax law was trying to stimulate research and development, or exports, or agriculture. I've seen some of this tax shelter stuff up close, and it's a bad deal. Don't make business decisions based on taxes. Stick to business that works for business reasons, and leave the shelters to the ... well, leave the shelters. Of those shelters I know of up close, people related to me, none of them worked. The IRS caught on to the attempts to exploit unintended loopholes, and the shelters didn't work.
Tim Berry is the president of Palo Alto Software Inc., which produces the industry's leading business planning software, Business Plan Pro, as well as other popular planning applications for businesses.
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