Luxury Cars

Cu Bua wrote:

likes to fight- well by turning personal expenditures into allowable deductions you save taxes ala tax shelter. Some people dont claim profit in business but show "profit motive" and therefore are allowed to use expenses as deductions even though no profit has been made. Its simple really.
Think big picture for a minute and i am sure you can see the possibilities

CuBua, I understand your short response and your point, but understand that you are dealing with someone currently owning businesses #5 & #6 (Including a gym as #2). All you are doing is stating a basic objective of any business owner. For anyone to "think" that owning any business is a tax shelter is beyond naive. You can assume that you understand what expenses are and aren't deductable, but until you sit down with your accountants and get a detailed outline of the federal and local codes and how they apply to your situation, you are dreaming (Profit motive isn't black and white, at least not here in Oregon). My gym was easily the least profitable of any venture I have had, was the single biggest headache and was the second most heavily taxed besides the construction companies I currently run. If you haven't already committed to the gym, I strongly suggest you investigate a little more deeply. If you are seriously looking for a very profitable business with low cost start up and easily fudgable errr, I mean low taxes, consider a coffee shack.

If you have more detailed information on profit motive that is a little less gray in your area, please share as I'm always looking for anything I can kick my countants in the nuts with!!!

fights,

first off let me say i do not own a gym just see it as a way to limit ones taxable income(granted this is for someone that would be in a high tax bracket)

So what we are doing is using personal expenses(what would be taxable income) showing a profit motive in a business venture and through circumstances do not show a profit. Our personal expenses are now not taxable

on a real simple play i pay myself and family members a generous salary and show little or no gain in profit. My personal investment is not taxable and i might even be due a credit.

I think of it like taxing capital gains, I make a trade that looses money and instead of averaging down to chase percentages i sell and use that loss to offset against capital gains throughout the year.

Again, you're using assumption and hypotheticals in your plan. You are pre-planning circumstances that may or may not come to fruition. Your concept of profit motive is a basic theory that can be applied to almost any business under the right circumstance. None of these are bad things, but you have to be very careful as to not cross that line that invites a full fledged audit. And you really need to be careful with the over inflated self pay ploy. IRS agents aren't as stupid as one might think and a string of questionable moves on a return can quickly invite a phone call. If they see that you are paying you and your family members double the going rate of similar positions at other gyms in the same area while claiming a loss, you might be in for way more headaches than you want. It doesn't take a rocket scientist long to dig through the books and see enough discrepency to accuse or prove intent to fraud. I'm not saying it can't be done CuBua, I'm saying that you have to be very careful not to get too greedy when utilizing these tactics because the last thing you want is Uncle Sam up your ass.

From experience, I have never seen anything that is a true tax shelter. The closest thing to it is any business where the primary form of payment for service or product is cash for obvious reasons. The gym was more headaches than it was worth in almost every way. Liability and insurance issues, maintenance and inspections, early default of contract issues, etc. And I won't even get into the clientele and the constant need for babysitting and on staff goons. Having Bally's, Gold's and 24 Hour nearby made it almost impossible to charge enough to make a decent profit. If you are dead set on aging ten years in six months and have money to burn, then a gym is right up your alley.

Now, I'm dead serious when I say think about a road side coffee shack. I had 1/10th the investment and turned triple the profits and had the lowest stress and headaches of any business I have had. I still take a small piece while my niece enjoys the fruits of getting her feet wet while running her own business. If I wasn't so tight and hanging on to any loose change during these times, I would honestly consider dropping one or two more and seeing if she had the fortitude to run multilple stores... To put it bluntly, cash in hand and very carefully manipulated, I mean carefully logged records lead to a virtual road side gold mine...

I'm not too big on the luxury cars...I like my 2006 Dodge Ram 1500 Hemi V-8 just fine thank you. Its my baby!

This is pretty much a carbon copy of my truck just basing it off of the website I found it on:

LTFG congrats on 3-0 at 102

nothing is absolute or everyone would have the business plan to make money. I have gone over this with my tax attorney and he confirms it can be lucritive and a good way to save tax monies.

I know 2 people who own membership gyms and one that owns mma gym. One is a 1 on 1 private session place and i dont get into specifics but he is doing well and another that does primarly group training and he is planning on opening a 2nd gym in my area. the mma guy is where i train and based on number of people and his overhead he does ok.

note i dont have aspirations of owning a gym as a business but if my endevours continue to produce like this past year it could become an appealing way for me to venture into another business(based on business plan and practices i would implement)

sometime let me hear your coffee shop scenario. I was close to opening a smoothie bar( based on minimal investment and lack of viable competitor in my area

Thanks CuBua...

Agreed about the business in general comment. If you/he feel this is a good idea in your area, then by all means pursue it. Hopefully you live in an area that can support multiple private gyms.

As far as the coffee shops go, anytime. Though, I will probably give you the input via PM and take it off the luxury cars thread. Just seems like we have gotten way off topic here.