Good Expense For An LLC?
If an LLC's income is used to invest or acquire another LLC holding Real Estate asset, when filing taxes (for the first LLC) can that income be written off as an expense?
-KvTwrs
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[ Edited by KvTwrs on Date 03/25/2004 ][ Edited by KvTwrs on Date 03/25/2004 ]
No. Let's simplify the question a little. You make $100K per year. You are taxed on all your income.
When you use $50K of your income to purchase a rental property, your purchase price is not an investment expense. Instead part of it becomes your depreciation basis, and you recover your cost over the asset life of the property.
The $50K you used to purchase the property is still taxed as part of your $100K income -- so we say that your investment purchase is done with after-tax dollars.
Apply this analogy to your multiple LLC situation to get the same answer..