You probably have been hammered by the economy in one way or another. That means you’re like 90%+ of my clients. I actually have some clients who have contrarian businesses that thrive in down times. For them, this is the bonanza time. When it turns (and it will), they’ll be experiencing the downturn most of the rest of us are seeing now.
So whether it happened to you now, or it will happen to you later, there is one big question.
Do You Know How to Turn a Loss Into Cash?
Today I’m going to talk about 3 different strategies for turning losses into cash. You’ll never look at losses the same way again!
Strategy #1: Turn a Loss Into Cash: Tax Refund
In February 2009, there was a retroactive tax change made for 2008. For that one year only, if you had a net operating loss from your business (or investments that run like a business), you had a choice of carrying that loss back to previously more prosperous years. That’s called a net operating loss carryback.
Normally, you can do that for 2 years. If you were heavily in real estate losses, though, that probably doesn’t do a lot of good. That’s because for most people the real estate losses started in 2006 or at the latest, 2007. So a real estate loss in 2009, can be carried back to 2007 – which already had a loss. So, nothing good there.
For 2008, though, you were allowed a choice of carrying back 5, 4 or 3 years. So, it was possible to carry that loss back to a previously more prosperous time. That means money in your pocket when you get to recoup some of the past taxes you’ve paid.
But, that time is gone – right? WRONG!
There is one more year of 5 year carrybacks allowed, but only if you’re investing in the Go Zone.
I’ll talk about that on my FREE! teleseminar with Go Zone expert Matt Bowles on August 15, 2009. It’s at 9 am Pacific, 10 am Mountain, 11 am Central and Noon Eastern and will be just 60 minutes. I know you have a lot of things to do on a busy weekend, so we don’t want to give you JUST the information you need to know to determine if the last chance Go Zone is right for you.
To sign up for Saturday’s FREE! Teleseminar, please register at http://www.DianesSeminars.com
Strategy #2: Turn a Loss Into Cash: Start-up Businesses
If you don’t have a business yet, start one! And do it before the end of the year so that you can get the tax breaks THIS year.
Entrepreneurs pay less tax than employees. Always.
In today’s world, it’s never been easier and faster to start a business. You don’t need to rent a building, hire employees or spend thousands on inventory. You can start tonight.
In fact, in my new book “The Bottomline of Your First Business”, I include a bonus list of over 100 businesses you can start for $1000 or less. “The Bottomline of Your First Business” is due out early 2010, so you’ll have to wait a few more months to get the list. Meanwhile, if you’re looking for ideas of new businesses you can start, how about joining us over at the forum at www.TaxLoopholes.com?
There are lots of savvy business owners posting there everyday, full of ideas on how you can get started with a new business.
There is one secret to your first year in business, though. This is where first year business owners make their biggest tax mistake. They figure since they have a loss anyway, they don’t bother to track all of their start-up expenses and general operating expenses. Why go through the work? After all, you’ve got a loss anyway.
Here’s why you want to count all the costs of your start-up business: Carryforward losses.
When your business turns a profit, you can use those losses to reduce the tax you pay. If your business never gets off the ground, you can take those losses when you quit.
Either way – count the expenses NOW or you’ll lose them forever.
Strategy #3: Turn a Loss Into Cash: Loss You Can Sell
This last strategy is a little trickier and one that you’ll definitely need help on from an experienced Tax Strategist.
If you have a company with a big carryforward loss and you don’t see a way out of the hole, you actually could have an asset that someone else may want. That’s because set up right, and in the right circumstances, that loss can be used to offset another company’s income.
Now you’re not going to get dollar for dollar on the sale, but if your company loss can save someone else thousands, maybe hundreds of thousands, of dollars in taxes, then there is value there.
In general, right now is not the time to be selling a loss company. That’s because others are in the same boat with losses of their own. Instead, you may want to just carryforward that loss and wait for the economy to turn. Depending on the type of company and other details, you may be able to carry it forward for up to 20 years.
When is a loss not a loss? When it puts money in your pocket.
These are just some of the strategies that we use to help our clients make the most of whatever circumstances they have.
We can help you too! Contact Us. to find out how we legally save our clients thousands of dollars in taxes year after year.
P.S. Last chance for the Go Zone! Don’t miss out on Saturday 8/15/09 FREE! Teleseminar. http://www.dianesseminars.com/