July 17, 2008, 11:32 am
Taxes for a company with a net loss
Ashley McGrand, Des Moines
Can a company owe income taxes in a year in which it has a net loss?
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To answer your answer simply, If all cost of sales (COS) and Expenses are TRUE and LEGAL; and you have a NET loss then there would be no income tax. Please be noted that some of the expenses (Example: Meals and Entertainment) are NOT 100% deductible.
Example: If you had gross profit of $100 and then had M&E of $150 then the net profit is negative $50. However, for tax (IRS) purpose the company made a profit of $25
You did not mention if your company is PROP, S-Corp, C-Corp !
The comments are from my experience !!