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Countable income

Is there a program, or means, by which a business may be purchased, all cash flow is devoted to purchase cost and interest, and none of such cash flow is treated as taxable income, for both state and federal taxes, until after the purchase price has been satisfied; at which time all subsequent cash flow is taxable income and, upon any eventual sale, the cost basis is considered to be zero when calculating taxable gain?

I.e., where the purchase price of the business, facilities and inventory are all considered to be part of the cost of services and goods sold.

Why not? Couldn’t it just be a bookkeeping matter of how one elects to treat items as costs, rather than as assets? I started out as Bus Ad, but switched to Physics because I just didn’t understand the purpose of double entry bookkeeping.

I expect to be laughed at, but am really puzzled why. It seems sensible to me.

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Simple answer is NO. To bad it doesn't work that way. Assets are assets. Cash flow used for purchase (unless it's all blue sky or interest) would increase equity and reduce liability. It's earnings plain and simple. There are ways to whittle taxable income down, but that's not one that will get by big brother.

Sep 9, 2011

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