And tax deductions on a loss are still a loss. Tax write-offs are a partial mitigation. They're taken off income, not directly from taxes.
If your tax rate is 25% and you write off a $100 loss, you still lose a net $75. Yeah, if you make negative money you may avoid some taxes entirely, but not all. There's still payroll tax, property tax, sales tax, and more that are isolated from corporate income tax.
A write-off will never make a company that's losing money before taxes profitable. They just soften the blow.
My understanding is that tax write-offs are deducted from the revenue, as in profit is revenue - expenses - write-offs, with different things being written of over different periods of time. So, let's say vehicles are written off over 8 years, and I buy a truck for 40,000$, I can deduct 5,000$ each year from my revenue, meaning my taxable profits are 5,000$ less each year.
Whether a multi-year or single-year write-off, it's still coming off taxable income, not taxes owed.
That truck doesn't become free. If your tax rate is 25% and you manage to write it off at 100%, you saved 10 grand in taxes. Which is nice if you need the truck, but if you don't actually need it you've actually wasted $30,000.
And tax deductions on a loss are still a loss. Tax write-offs are a partial mitigation. They're taken off income, not directly from taxes.
If your tax rate is 25% and you write off a $100 loss, you still lose a net $75. Yeah, if you make negative money you may avoid some taxes entirely, but not all. There's still payroll tax, property tax, sales tax, and more that are isolated from corporate income tax.
A write-off will never make a company that's losing money before taxes profitable. They just soften the blow.
My understanding is that tax write-offs are deducted from the revenue, as in profit is revenue - expenses - write-offs, with different things being written of over different periods of time. So, let's say vehicles are written off over 8 years, and I buy a truck for 40,000$, I can deduct 5,000$ each year from my revenue, meaning my taxable profits are 5,000$ less each year.
Whether a multi-year or single-year write-off, it's still coming off taxable income, not taxes owed.
That truck doesn't become free. If your tax rate is 25% and you manage to write it off at 100%, you saved 10 grand in taxes. Which is nice if you need the truck, but if you don't actually need it you've actually wasted $30,000.
That's pretty much what I've been saying.