Internal Revenue Code - Section 212
There ain't a whole lot that's good about our tax code. It's more complicated than that ridiculous Starbucks coffee naming system. Actually doing your taxes is a chore generally left for the last possible minute. And the very worst part is that while you slave over your stupid 1040, trying to extract pennies of your hard earned wage back from the government, some soulless corporate raider has a team of accountants figuring out a way that he can keep more money than you'll see in your lifetime.
It's Internal Revenue Code - Section 212 that made all of that possible.
From Wikipedia:
Internal Revenue Code ยง 212 provides a deduction, for U.S. federal income tax purposes, for expenses incurred in investment activities. Taxpayers are allowed to deduct, all in the ordinary and necessary expenses paid or incurred during the taxable year:
The ruling was that investment expense qualified as costs of producing income, and thus, should be deductible. Now, here's where it gets a little fuzzy and will take most of my cunning to explain. No, strike that. All my cunning.
The idea of "investment in the production of income" is pretty vague. You have to spend money to make money makes sense, but if you're investing in a business of some kind, those deductions can be itemized and written off as "trade or business" expenses on a Schedule C addendum to your 1040. This section specifically refers to those investment activities not made in conjunction with a trade or business. What does this mean?
Simply put, get your money into an IRA. You won't be sorry.
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