I’m not a CPA but if someone runs a software company for ten years with no profit and then sells it for a profit, isn’t that just a deferred profit? A profit was made in the end and a previous profit must have been there by the owner(s) to have sustained the loss. Point is making money is important to sustain our lifestyles regardless of how meager a lifestyle that may be.
Yeah I’m sure I have some of those in my mouth but when they come out they will be properly disposed of without having to call a haz mat team for a clean up. Not like breaking a CFL in your house.
I like Krauthammer and if you look back at his past writing, he has a pretty good track record for predicting the future, but I’m not sure about his latest. He says raise the gas tax by a dollar and then instead of spending it, reduce FICA by a dollar to provide relief to workers. I say raise it a dollar but don’t let the money go to DC to be misappropriated. Force the money into roads and bridges not bike paths and choo choos. Then raise the bus and train rates a dollar to pay for mass transit.
Reduced drilling is mostly a function of CASHFLOW. Those companies that have lots of cash and good earnings are not reducing their drilling activities. The US will keep increasing oil production thanks to those new technologies.
Expect oil prices to be in a trough this year and make slight recovery toward the end of 2015. OPEC will tolerate a price of $70 a barrel, at which level most US shale oil operations are profitable. That’s the forecast level for the next 3 years, starting 2016, or so. Don’t expect oil prices to go back up to $110+ anytime soon.
What type of vehicle you buy next is entirely up to you, but we have a guy here, a retiree, who has an immaculate 1976 Chevy Caprice with the 454 engine that gets 8 mpg in town and 13 on the highway. If he drove only 12,000 miles per year he would have to fork out $2285 per year in gas costs. If gas went to $4 per gallon, that would be $4571 per year. Engineers would call this car “technically/economically obsolete”.
By the same token, hybrids need high gas prices and/or high miles driven to justify their existence.
The biggest employer in the US is nonprofit,we have a "non profit"utility around here that used to send their wheels to Vegas every year-dont know who paid for that
I'm not a CPA but if someone runs a software company for ten years with no profit and then sells it for a profit, isn't that just a deferred profit?
It’s NOT deferred profit. There was no guarantee he was going to be able to sell the company. It’s a huge risk. And the vast majority of start-ups don’t make it. A lot of them work that way. They are not looking to start a long term business…they are looking to bring a new and different technology into the market in the hope they get bought out…Operative word there is “Hope”.
I know the founder of the start-up company that gets bought out makes a nice profit
But what about his employees . . . ?!
Should we assume that they knew that the start-up would probably go under or get bought out?
I don’t know about you guys, but I theoretically have some sympathy for the employees who might be out of a job. Let’s say the company that bought out the start-up doesn’t retain the employees . . .
I say theoretically because I don’t know any of these guys
“I’m not a CPA but if someone runs a software company for ten years with no profit and then sells it for a profit, isn’t that just a deferred profit?”
Isn’t that capital gains?
Either way, as we do gas prices, we might have to replace one car soon. The difference in gas cost ($2.69 today here in CA) between my wife driving our CX-9 locally vs lets say an Accord/Camry or Sonata is $100 per month which is somewhat substantial for us. On the other hand, even though the Prius would cost even less, the initial extra $ to buy one becomes prohibitive.
@galant Capital Gains; that’s exactly what it is. There is a book value on the company, whether it makes money or not. The selling price minus the book value is capital gains which is taxed differently than income.
A Canadian company developing fuel cells for automotive use never made money but was sold with good capital gains to a richer firm because the technology was very valuable.
If I buy a McD’s for $1million and operate it for a year losing $1,000 each month and then sell the business for $2million is the $988,000 that I put in my pocket income?
You can get $988,000 in your Captain Kangaroo pocket? Is that in 100’s, 20’s, or just a check? I believe it would be called a short term capital gain. Income would be if you paid yourself which would have contributed to the monthly loss. It would also be called a miracle, especially with the french fry shortage. Maybe I should have said monetary gain instead of profit so we didn’t get diverted into a discussion of accounting terms. I assumed you originally mean profit with a lower case “p” not a capital “P” in lamenting those folks after the almighty dollar.
At any rate you could buy quite a nice SUV with your gain without concern for any future fuel prices. Anyone with a sense of humor out there today?
Even an old mechanic can look at the economic picture and recognize that working families in this country are taxed the highest while receiving the least benefit of any group regardless how complex and convoluted the politicians are in shuffling tax rates and benefits behind the smoke and mirrors.
If I buy a McD’s for $1million and operate it for a year losing $1,000 each month and then sell the business for $2million is the $988,000 that I put in my pocket income?
The real question is, if that is my capital gain and we eventually move to a point where I will pay NO taxes what so ever on capital gains…or probably less then the employees that work for you, who will pay for medical giggle weed ?
The real question is, if that is my capital gain and we eventually move to a point where I will pay NO taxes what so ever on capital gains
It’s capital gains which is taxed at a lower rate. He also gets a minimal income (or no income) so he’s pays tax at a much lower rate.
As to what happens to the employees…99% of the time they’re out the door…sometimes they get absorbed into the company that bought them. It happened to me twice during the 90’s. Both times I lost my job. The last time it happened I showed up to work only to find the doors locked.
That’s when I started to do a lot of research into how and why these entrepreneurs would take the risk they were taking. Most of the time there was almost no risk because they had investors. Many of these guys were extremely good salesmen with an idea. They would get everyone else to take the risk. I’m much more careful now about the type of start-up I’d consider working for.
@db4690, often the employees are part of the package. It makes sense to keep the people that already understand the product and the customers for it. The former owners usually, but not always, take the money and run. But sometimes they continue to work at the company in a management roll, at least until the new owner is comfortable taking over.
Gas is about a 1.60 something around here now but it’s a double edged sword. I just got my oil/gas royalty check and it’s down a pretty fair amount. Yippee and damn on the same day…
Kev…The good news is, the IRS is " renegotiating " for those who qualify (lower income), lowering your committment to pay back taxes. That means the poor can continue their dasterly efforts of hording money to buy all the new cars. By next summer, the only way you will be able recognize the homeless is, they will be sleeping in the back seat of a Lexus instead of on a park bench while the wealthy will be driving Ford Focus to work on Wall street in order to save gas. The natural order of only the wealthy having lux cars will be dramatically altered by the IRS.
Lower income folks basically pay no (income) tax (they do pay SS tax), so if they’re truly poor, there’s no back taxes to collect.
On top of which, if they have children (and are wiley enough to claim just the right amount of “earnings”), they can get $8,000 of “free money!” (I fall in the same earnings category, but I can only get back what I paid, as I lacked the wisdom and planning skills necessary to have 3-4 children I have no means of supporting!)
