Carried Interest Loophole on yore Hedge Funds

[BuDG123]

I know many of you are hedge fund managers, venture capitalists or a partner in a private equity firm.

Do you guys use this long standing tax break tool? It brings your effective tax rate down from like 48% all the way down to only 20%. If you are not using this loophole this tax season, you are pissing way your hard earned cash. This loophole has been a core tenant for campaign contributions on both sides of the isles for decades, and is why the rich will always get richer. It is a known loophole that will never go away no matter who is elected. The last 8 presidential candidates specifically said they would do away with it, but somehow, it prevails! Use it to your advantage. Carry that compounded interest, buy some rare art! (Once you are over the hurdle)

[rubechick]

No, but I give my tax guy the receipts for my license tabs. Hope that helps.

[Voltron]

I plan to start a hedge fund soon so thank you for this information.

[Unbiased Observer]

I plan to start a hedge fund soon so thank you for this information.

You could run it from your tractor while it is on autopilot.

[Voltron]

I plan to start a hedge fund soon so thank you for this information.

You could run it from your tractor while it is on autopilot.

Or even during a Vegas trip

[anthony]

No, but I give my tax guy the receipts for my license tabs. Hope that helps.

You itemize?

[rubechick]

No, but I give my tax guy the receipts for my license tabs. Hope that helps.

You itemize?

Probably not, but I add them to the tax guy folder regardless. It looks like he did tally it up, but ended up using the standard deduction this year.

[anthony]

No, but I give my tax guy the receipts for my license tabs. Hope that helps.

You itemize?

Probably not, but I add them to the tax guy folder regardless. It looks like he did tally it up, but ended up using the standard deduction this year.

That’s good to hear. I don’t have the energy to organize receipts like that….

[rubechick]

You itemize?

Probably not, but I add them to the tax guy folder regardless. It looks like he did tally it up, but ended up using the standard deduction this year.

That’s good to hear. I don’t have the energy to organize receipts like that….

Those are easy - when I pay them during the year, I just add the receipt to that year's folder. That's the only thing in the "2024 Taxes" folder so far. I think it's just a habit from when I used to enter them when it actually mattered. Same with charitable donations - they used to reduce taxable income, but now they don't matter unless they're really big (bigger than I donate at least!)

[anthony]

Probably not, but I add them to the tax guy folder regardless. It looks like he did tally it up, but ended up using the standard deduction this year.

That’s good to hear. I don’t have the energy to organize receipts like that….

Those are easy - when I pay them during the year, I just add the receipt to that year's folder. That's the only thing in the "2024 Taxes" folder so far. I think it's just a habit from when I used to enter them when it actually mattered. Same with charitable donations - they used to reduce taxable income, but now they don't matter unless they're really big (bigger than I donate at least!)

We used to itemize, back when the wife did daycare and we had a mortgage and stuff. We had a tax person to take care of it at that time. Then when my wife went back to work and the house was paid off i took a look at the tax forms after the tax lady completed them. I saw she went through the work of computing the itemized return vs standard deduction but choose the standard deduction. I was paying something like $50 a form for her to do the work. I decided i could save some money and do it myself since itemizing didn’t make sense anymore.

[rubechick]

That’s good to hear. I don’t have the energy to organize receipts like that….

Those are easy - when I pay them during the year, I just add the receipt to that year's folder. That's the only thing in the "2024 Taxes" folder so far. I think it's just a habit from when I used to enter them when it actually mattered. Same with charitable donations - they used to reduce taxable income, but now they don't matter unless they're really big (bigger than I donate at least!)

We used to itemize, back when the wife did daycare and we had a mortgage and stuff. We had a tax person to take care of it at that time. Then when my wife went back to work and the house was paid off i took a look at the tax forms after the tax lady completed them. I saw she went through the work of computing the itemized return vs standard deduction but choose the standard deduction. I was paying something like $50 a form for her to do the work. I decided i could save some money and do it myself since itemizing didn’t make sense anymore.

Good call out - I just checked and it looks like he's not charging us for that. He's probably just glancing over everything, eyeballing that there's no way it's higher than the standard $27,700 deduction and then ignoring them. I should ask him next year if he just wants me to leave them out.

[bubu dubu.]

I know many of you are hedge fund managers, venture capitalists or a partner in a private equity firm.

Do you guys use this long standing tax break tool? It brings your effective tax rate down from like 48% all the way down to only 20%. If you are not using this loophole this tax season, you are pissing way your hard earned cash. This loophole has been a core tenant for campaign contributions on both sides of the isles for decades, and is why the rich will always get richer. It is a known loophole that will never go away no matter who is elected. The last 8 presidential candidates specifically said they would do away with it, but somehow, it prevails! Use it to your advantage. Carry that compounded interest, buy some rare art! (Once you are over the hurdle)

Another loophole is "owning a business". This is why all your wealthy friends own some form of business, even the ones who's main source of income comes from their day-to-day job. So many things can be write offs.

Want an expensive addition to your home? If you have your home address listed as a business address, Turn that addition into "office space"...boom write off.

Traveling for the holidays? schedule a business meeting wherever your destination is. Boom, everything from food to transportation for that trip are a write off.

Need new clothes? If those clothes can be considered part of your work attire, boom, write off.

Need some form of insurance on your spouse such as disability or life insurance? Hire your spouse as an employee of the business, and have the "business" pay for the premiums. Boom, write off.

Need a new car, and have to use a vehicle for business reasons? - new car, boom, write off.

Theres some exceptions, but basically anything that you need to "run" you business can be a write off.

[mlhouse]

The carried interest loophole should be eliminated. The gains that a hedge fund/pe firm makes are not capital gains because they do not put their own capital into the investment.

But you should ask yourself why the carried interest exemption is not eliminated from the tax code. Trump talked about eliminating it in 2017 but that never got off the ground. If you do not know the answer to why it is not eliminated, ask yourself why Chuck Shumer is the Democrat Majority Leader. Wall Street controls Democratic candidates.

[mlhouse]

Another loophole is "owning a business". This is why all your wealthy friends own some form of business, even the ones who's main source of income comes from their day-to-day job. So many things can be write offs.

Want an expensive addition to your home? If you have your home address listed as a business address, Turn that addition into "office space"...boom write off.

Traveling for the holidays? schedule a business meeting wherever your destination is. Boom, everything from food to transportation for that trip are a write off.

Need new clothes? If those clothes can be considered part of your work attire, boom, write off.

Need some form of insurance on your spouse such as disability or life insurance? Hire your spouse as an employee of the business, and have the "business" pay for the premiums. Boom, write off.

Need a new car, and have to use a vehicle for business reasons? - new car, boom, write off.

Theres some exceptions, but basically anything that you need to "run" you business can be a write off.

You significantly overstate the value of cheating because you own a business. If you built a huge addition on your home and claimed that as a business investment and did not get audited you are very lucky. The rules for home office deduction are very stringent. I advise not to use it.

Life insurance policies for owners and spouses are not tax deductible.

You can deduct some travel and some meals. I deduct most travel but I never deduct meals on my business expenses. The reason for that is, like the home office deduction the rules regarding deducting meals requires documentation that I prefer not to maintain.

But then, if you are Hunter Biden you can do your taxes for your LLC like this: https://gop-waysandmeans.house.gov/wp-c ... dacted.pdf

The above exhibit is the 1120 Corporate return for the LLC owned by Hunter called Hudson West 3. It is very interesting. Total revenues for 2018 were $7,5xx all from interest on their checking account. The LLC/corporation had expenses/deductions of $ 4,185,760. (page 2 of this document).

On page 9 you will find the balance sheet for Hudson West III. They received a $6,000,000 "loan" from the Chinese. They started year with $4.281 million in cash and ended with $158. The loan balance did not change and the total "Retained Earnings" for Hudson West III, including their 2017 operations, was -$5,999,842 (minus $5 million, nine hundred ninety nine thousand eight hundred and 42 dollars).

The last page shows some of the detailed expenditures: $3.4 million in legal and professional fees, $253,000 in management fees, and $389,000 in development fees. Plus, a deduction, at 50%, of $105,116 in meals. That means Biden and his cronies expenses $210,000 in "business" meals or $575 every day of the year on a "corporation" that had a total revenue of $7,500.

Notice also, in the reported expenses, there was not a single dollar paid in interest or principal payments on the $6 million "loan".

The only way someone fills out a tax return like this (as they did in 2017) is they know the IRS will never enforce the tax codes and cover for them. Yet, you think there is no evidence of the Bidens wrong doing.

[bubu dubu.]

Another loophole is "owning a business". This is why all your wealthy friends own some form of business, even the ones who's main source of income comes from their day-to-day job. So many things can be write offs.

Want an expensive addition to your home? If you have your home address listed as a business address, Turn that addition into "office space"...boom write off.

Traveling for the holidays? schedule a business meeting wherever your destination is. Boom, everything from food to transportation for that trip are a write off.

Need new clothes? If those clothes can be considered part of your work attire, boom, write off.

Need some form of insurance on your spouse such as disability or life insurance? Hire your spouse as an employee of the business, and have the "business" pay for the premiums. Boom, write off.

Need a new car, and have to use a vehicle for business reasons? - new car, boom, write off.

Theres some exceptions, but basically anything that you need to "run" you business can be a write off.

You significantly overstate the value of cheating because you own a business. If you built a huge addition on your home and claimed that as a business investment and did not get audited you are very lucky. The rules for home office deduction are very stringent. I advise not to use it.

Life insurance policies for owners and spouses are not tax deductible.

You can deduct some travel and some meals. I deduct most travel but I never deduct meals on my business expenses. The reason for that is, like the home office deduction the rules regarding deducting meals requires documentation that I prefer not to maintain.

But then, if you are Hunter Biden you can do your taxes for your LLC like this: https://gop-waysandmeans.house.gov/wp-c ... dacted.pdf

The above exhibit is the 1120 Corporate return for the LLC owned by Hunter called Hudson West 3. It is very interesting. Total revenues for 2018 were $7,5xx all from interest on their checking account. The LLC/corporation had expenses/deductions of $ 4,185,760. (page 2 of this document).

On page 9 you will find the balance sheet for Hudson West III. They received a $6,000,000 "loan" from the Chinese. They started year with $4.281 million in cash and ended with $158. The loan balance did not change and the total "Retained Earnings" for Hudson West III, including their 2017 operations, was -$5,999,842 (minus $5 million, nine hundred ninety nine thousand eight hundred and 42 dollars).

The last page shows some of the detailed expenditures: $3.4 million in legal and professional fees, $253,000 in management fees, and $389,000 in development fees. Plus, a deduction, at 50%, of $105,116 in meals. That means Biden and his cronies expenses $210,000 in "business" meals or $575 every day of the year on a "corporation" that had a total revenue of $7,500.

Notice also, in the reported expenses, there was not a single dollar paid in interest or principal payments on the $6 million "loan".

The only way someone fills out a tax return like this (as they did in 2017) is they know the IRS will never enforce the tax codes and cover for them. Yet, you think there is no evidence of the Bidens wrong doing.

wut's the stuff about Biden, why did that enter the conversation?

Also, LI can be tax deductible to business owners, as it can be considered a necessary expense of operating business.
-If you’re a business owner and premiums for your employees are a business expense, they may be deductible. (USA Today)

[mlhouse]

Another loophole is "owning a business". This is why all your wealthy friends own some form of business, even the ones who's main source of income comes from their day-to-day job. So many things can be write offs.

Want an expensive addition to your home? If you have your home address listed as a business address, Turn that addition into "office space"...boom write off.

Traveling for the holidays? schedule a business meeting wherever your destination is. Boom, everything from food to transportation for that trip are a write off.

Need new clothes? If those clothes can be considered part of your work attire, boom, write off.

Need some form of insurance on your spouse such as disability or life insurance? Hire your spouse as an employee of the business, and have the "business" pay for the premiums. Boom, write off.

Need a new car, and have to use a vehicle for business reasons? - new car, boom, write off.

Theres some exceptions, but basically anything that you need to "run" you business can be a write off.

You significantly overstate the value of cheating because you own a business. If you built a huge addition on your home and claimed that as a business investment and did not get audited you are very lucky. The rules for home office deduction are very stringent. I advise not to use it.

Life insurance policies for owners and spouses are not tax deductible.

You can deduct some travel and some meals. I deduct most travel but I never deduct meals on my business expenses. The reason for that is, like the home office deduction the rules regarding deducting meals requires documentation that I prefer not to maintain.

But then, if you are Hunter Biden you can do your taxes for your LLC like this: https://gop-waysandmeans.house.gov/wp-c ... dacted.pdf

The above exhibit is the 1120 Corporate return for the LLC owned by Hunter called Hudson West 3. It is very interesting. Total revenues for 2018 were $7,5xx all from interest on their checking account. The LLC/corporation had expenses/deductions of $ 4,185,760. (page 2 of this document).

On page 9 you will find the balance sheet for Hudson West III. They received a $6,000,000 "loan" from the Chinese. They started year with $4.281 million in cash and ended with $158. The loan balance did not change and the total "Retained Earnings" for Hudson West III, including their 2017 operations, was -$5,999,842 (minus $5 million, nine hundred ninety nine thousand eight hundred and 42 dollars).

The last page shows some of the detailed expenditures: $3.4 million in legal and professional fees, $253,000 in management fees, and $389,000 in development fees. Plus, a deduction, at 50%, of $105,116 in meals. That means Biden and his cronies expenses $210,000 in "business" meals or $575 every day of the year on a "corporation" that had a total revenue of $7,500.

Notice also, in the reported expenses, there was not a single dollar paid in interest or principal payments on the $6 million "loan".

The only way someone fills out a tax return like this (as they did in 2017) is they know the IRS will never enforce the tax codes and cover for them. Yet, you think there is no evidence of the Bidens wrong doing.

wut's the stuff about Biden, why did that enter the conversation?

Also, LI can be tax deductible to business owners, as it can be considered a necessary expense of operating business.
-If you’re a business owner and premiums for your employees are a business expense, they may be deductible. (USA Today)

I was demonstrating how you can make deductions if you are a Biden.

As far as deductibility of life insurance, yes, there is an exception that allows for $50k of coverage if you offer life insurance to every employee. That is so minimal it really isnt a loophole. But ok.

[bubu dubu.]

You significantly overstate the value of cheating because you own a business. If you built a huge addition on your home and claimed that as a business investment and did not get audited you are very lucky. The rules for home office deduction are very stringent. I advise not to use it.

Life insurance policies for owners and spouses are not tax deductible.

You can deduct some travel and some meals. I deduct most travel but I never deduct meals on my business expenses. The reason for that is, like the home office deduction the rules regarding deducting meals requires documentation that I prefer not to maintain.

But then, if you are Hunter Biden you can do your taxes for your LLC like this: https://gop-waysandmeans.house.gov/wp-c ... dacted.pdf

The above exhibit is the 1120 Corporate return for the LLC owned by Hunter called Hudson West 3. It is very interesting. Total revenues for 2018 were $7,5xx all from interest on their checking account. The LLC/corporation had expenses/deductions of $ 4,185,760. (page 2 of this document).

On page 9 you will find the balance sheet for Hudson West III. They received a $6,000,000 "loan" from the Chinese. They started year with $4.281 million in cash and ended with $158. The loan balance did not change and the total "Retained Earnings" for Hudson West III, including their 2017 operations, was -$5,999,842 (minus $5 million, nine hundred ninety nine thousand eight hundred and 42 dollars).

The last page shows some of the detailed expenditures: $3.4 million in legal and professional fees, $253,000 in management fees, and $389,000 in development fees. Plus, a deduction, at 50%, of $105,116 in meals. That means Biden and his cronies expenses $210,000 in "business" meals or $575 every day of the year on a "corporation" that had a total revenue of $7,500.

Notice also, in the reported expenses, there was not a single dollar paid in interest or principal payments on the $6 million "loan".

The only way someone fills out a tax return like this (as they did in 2017) is they know the IRS will never enforce the tax codes and cover for them. Yet, you think there is no evidence of the Bidens wrong doing.

wut's the stuff about Biden, why did that enter the conversation?

Also, LI can be tax deductible to business owners, as it can be considered a necessary expense of operating business.
-If you’re a business owner and premiums for your employees are a business expense, they may be deductible. (USA Today)

I was demonstrating how you can make deductions if you are a Biden.

As far as deductibility of life insurance, yes, there is an exception that allows for $50k of coverage if you offer life insurance to every employee. That is so minimal it really isnt a loophole. But ok.

50K of coverage is nothing, but you turn that thing into a WL, IUL or VUL and fund it as high as you can without MECing it, and you have both a tax deductible and tax free investment vehicle. As far as investment vehicles go, that's about as good as you can do.

[mlhouse]

wut's the stuff about Biden, why did that enter the conversation?

Also, LI can be tax deductible to business owners, as it can be considered a necessary expense of operating business.
-If you’re a business owner and premiums for your employees are a business expense, they may be deductible. (USA Today)

I was demonstrating how you can make deductions if you are a Biden.

As far as deductibility of life insurance, yes, there is an exception that allows for $50k of coverage if you offer life insurance to every employee. That is so minimal it really isnt a loophole. But ok.

50K of coverage is nothing, but you turn that thing into a WL, IUL or VUL and fund it as high as you can without MECing it, and you have both a tax deductible and tax free investment vehicle. As far as investment vehicles go, that's about as good as you can do.

The value of $50k of life insurance is less than $500.

[bubu dubu.]

I was demonstrating how you can make deductions if you are a Biden.

As far as deductibility of life insurance, yes, there is an exception that allows for $50k of coverage if you offer life insurance to every employee. That is so minimal it really isnt a loophole. But ok.

50K of coverage is nothing, but you turn that thing into a WL, IUL or VUL and fund it as high as you can without MECing it, and you have both a tax deductible and tax free investment vehicle. As far as investment vehicles go, that's about as good as you can do.

The value of $50k of life insurance is less than $500.

No. You can put a decent amount of money into a WL or VUL. The cash value grows (through dividends with WL, or with the market for VUL) you can put a few grand in every year.
You are probably thinking of term insurance that has no cash value. If you fund a 50k cash value policy for several years, you'll have a nice chunk of tax free money in retirement. Much more than $500 worth

[mlhouse]

50K of coverage is nothing, but you turn that thing into a WL, IUL or VUL and fund it as high as you can without MECing it, and you have both a tax deductible and tax free investment vehicle. As far as investment vehicles go, that's about as good as you can do.

The value of $50k of life insurance is less than $500.

No. You can put a decent amount of money into a WL or VUL. The cash value grows (through dividends with WL, or with the market for VUL) you can put a few grand in every year.
You are probably thinking of term insurance that has no cash value. If you fund a 50k cash value policy for several years, you'll have a nice chunk of tax free money in retirement. Much more than $500 worth

Whole life is a terrible investment.

And, the point was the tax deduction.