[naikrovek]

> That gives you a profit, from a tax perspective, of $820k.

> But you only have $100k of actual dollars.

> Good luck paying your taxes!

a lot of people here are conflating "taxable income" and "the amount owed in taxes" for some reason.

if I earn $100/year, and I can deduct $50 of that, my tax bill is not $50. It is some percentage of $50, usually a low number for businesses. (Amazon regularly pays $0/year in taxes.)

depending on the tax rates and the locality of that business, the amount owed on tax is going to be anywhere from $0 to $50, and it is going to heavily favor the low end of that spectrum. I don't think any business pays 100% of its taxable income in taxes unless they have been heavily fined.

$100k is likely far more than enough to pay the tax on $820k of taxable income for a business. It could be enough to pay that tax bill 10 times over, it's hard to say.

my point is that taxable income != tax owed.

[aqme28]

(Not a tax professional) The federal corporate tax rate is 21% and for states it ranges from 0 to about 9%.

So generally you're going to pay at least 21% or $170k for those "profits."

[rbultje]

LLCs pay 37%, not 21%. Plus state plus local. This can reach 50% in high-tax areas like CA or NY.

[shaftway]

> Amazon regularly pays $0/year in taxes.

They *were* able to, because they *were* able to offset the cost of developers instead of having to amortize it out over 5 years.

[naniwaduni]

For Amazon, this just costs two years on the taxes. They'll still be able to claim depreciation of this year's dev work for the next four, though.

[koolba]

> if I earn $100/year, and I can deduct $50 of that, my tax bill is not $50. It is some percentage of $50, usually a low number for businesses. (Amazon regularly pays $0/year in taxes.)

It’s not that low. Federal corporate tax rate is 21%. So you would be on the hook for $10 in taxes.