Capital Gains Tax

[bj79995]

Is the income generated from an online subscription service considered capital gains tax if the system is fully automated? I know the sale of the business would be taxed at capital gains.

 

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[biophase]

I'm going to say No.

 

[ari_ari]

Iamnaloa ( I am not a lawyer or an accountant)
No it's ordinary income.

 

[DeletedUser2]

depends if its in a pass through entity, (llc or S corp) or if its in a C corp.
and if you hold the earnings in the corporation as retained earnings or dividend it out, or if you disburse it to members.

and if its PROFIT, vs Revenue.

lots of "IT DEPENDS" so, time to get an accountant.. or CPA

Z

 

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[bj79995]

Thank you guys

 

[Tregan]

depends if its in a pass through entity, (llc or S corp) or if its in a C corp.
and if you hold the earnings in the corporation as retained earnings or dividend it out, or if you disburse it to members.

and if its PROFIT, vs Revenue.

lots of "IT DEPENDS" so, time to get an accountant.. or CPA

Z

Zen,

Is there a resource (site/book/etc..) that teaches the in's and outs for taxes. I'm looking for creative ways to structure an LLC or S corp depending on the taxes set up and I want a no holds barred resources like MJ would produce. Any ideas? Thanks.

 

[GlobalWealth]

Is the income generated from an online subscription service considered capital gains tax if the system is fully automated? I know the sale of the business would be taxed at capital gains.

No, it is ordinary earned income for the business. If you are an LLC or Scorp, the income passes through to the owner(s). If it is a Ccorp, it is the Ccorp earnings and thus taxable by the Ccorp at corp tax rates.

Earnings are only considered capital gains if the earnings are passive. Even though you claim your business is automated (and presumably you are trying to claim passive), this is the primary function of the business. It is what the business does and thus it is the earned income from the business.

 

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