Buying the stocks and the bonds from the same corporation

Suppose that ABC corporation has issued stocks and bonds. The stock's symbol is ABC. As a shareholder, you are an owner of the company (albeit, a very minor one). Now, suppose that you lend your own
company, ABC, some money in the forms of buying ABC bonds. As you know, when you purchase bonds, the money is borrowed from you - the investor - and they pay this borrowed funds from you in the form of interest.
Because I'm investing money into my own company, this is an expense, which is tax-deductible. I should be able to invest in corporate bonds on a pre-tax basis. However, the interest should be taxed, because this is, for sure, earnings. Also, the interest is not taxed to the corporation, but using my logic, it should be taxed to the investor (which it is), and the money to invest in the bonds should be done on a pre-tax basis (which isn't the case now).
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It is not an expense. You get your money back at maturity.

Why?
704set
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704set wrote on 1/20/07 8:27 AM:

A LITTLE knowledge is a dangerous thing..........
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Sory, it's either a loan or an investment, neither of which are "tax deductible".

Nice thought, but the only method for doing so would be through a qualified plan, like a 401K or IRA. But they can't invest in a company you own.

And it is.

With the exceptions of qualified plans (IRA's, 401K's, etc) all investments are done with after tax money.
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Paul Thomas, CPA
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Sorry, but this is a lousy example. Investing money into ANY corporation is not an expense, particularly a C corporation. The CORP expenses it, depreciates it or assets it as it sees fit, but NEVER the investor. Even if the investor is an owner.
For the investor it is only a basis against future gains or loan repayments and does not get entered in to the individual's tax return. But I'm not an accountant.
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Lubow
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lubow wrote on 1/20/07 12:35 PM:

You can bet your ass the OP isn't either.......
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Do you play one on TV?
704set
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704set wrote on 1/20/07 5:13 PM:

Maybe, when he finishes "Formulation of Totally Useless Hypothetical Questions"(also known as Trolling 201), he will enroll in Accounting 101......
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Blash, my good man... is there a reason you piss off everybody?
A guy asked a question relating to writing off an investment. I stated that investments are not tax deductible but provide a basis against future returns. If you have a problem with that, get a lawyer. Or a shrink.
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Lubow



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lubow wrote on 1/21/07 5:24 PM:

Because this is being written by a kid asking all sorts of hypothetical questions which have NO influence on anyones' trading.....when you keep putting up stuff like this continuously, you are no more than a troll looking for exposure..... If you are pissed off at my answer, I'm sure you can imagine how much sleep I'm going to lose......

I have no problem with your answer, but I wonder why some idiots here always think of getting a lawyer when they see a post that doesn't fit the mold of what they want.......Welcome to the crowd!!!
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