Having also stumbled into a demographic group which is no longer primarily concerned with making money to survive, I'm struck by the observation that some of the most meaningful experiences of my life have been significantly subsidized by outside capital (VC, trust fund, nest egg, etc).
As a child (i.e., before I was about to turn 50), I'd always assumed that the value I paid for something was the true value of the experience. Now that I've enjoyed dozens (maybe hundreds) of VC-subsidized, "pre-revenue" services and products in the Bay Area, alongside tens of lovely restaurants that came and quickly went, and gallery exhibits which didn't sell out, it's becoming clear to me that profitability is not the only test of value (and maybe not even a good test at all).
Godspeed on your hobby/passion project/creative pursuit/meaningful work!
C-corporations are immune from the hobby loss rule. The Hobby loss rule applies to everything else - Individuals, Partnerships, Estates, Trusts,and S-Corporations.
Create a C-corp for podcasting, you can carry the Net Operating Losses forward indefinitely (due to 2017 new law) - so stack them up.
When the time comes, and you need a company to actually do something with, instead of creating a new company, refocus that company on its new purpose that is profit related, carry the losses forward to avoid income tax on the c-corp. When the company has income, you can eliminate up to 80% of your taxable income each year with losses from prior years. Or, you can have that company start doing something else in addition to your podcasting that generates income.
The C-corp can issue you dividends, which avoids payroll and income taxes, and instead is taxed at the cap gains rate, which is likely lower for you. So the money coming out is taxed very little due to the stacked NOLs and the money doesn't get all the taxes an LLC or S-Corp would once it goes to you.
This only works if you intend to have some sort of enterprise that makes money of course, or you already have one.
I know this because we had a company that lost money for quite a few years, which was a plan, because we were re-investing it back in and I got this advice from a CPA that seemed to be 100 years old. Back then you could only carry the loss forward for 20 years however.
I love your podcast because it's entertaining, thought-provoking, helpful content. I also low key enjoy reminding my family that I actually know Paul Ollinger IRL (I show them the printed email thread between you and Maradi where I'm cc'd) when the 4 of us listen to CM on roadtrips.
IMO, it's just a matter of time until Crazy Money hits the Prof G. Podcast Singularity. Until then, having it as a loss leader for your stand-up LOB is smart strategy. I'd suggest getting a good marketing science person to help you tune your attribution model if you and the IRS aren't seeing it pencil out.
Great article - this is not a hobby for you, no way. --- When I think about the carried interest loophole for hedge fund managers and juxtapose this against the hobby loss rule that beats up on everyday folks, it makes me think that our Congress is incompetent. (my attempt at dry humor)
Having also stumbled into a demographic group which is no longer primarily concerned with making money to survive, I'm struck by the observation that some of the most meaningful experiences of my life have been significantly subsidized by outside capital (VC, trust fund, nest egg, etc).
As a child (i.e., before I was about to turn 50), I'd always assumed that the value I paid for something was the true value of the experience. Now that I've enjoyed dozens (maybe hundreds) of VC-subsidized, "pre-revenue" services and products in the Bay Area, alongside tens of lovely restaurants that came and quickly went, and gallery exhibits which didn't sell out, it's becoming clear to me that profitability is not the only test of value (and maybe not even a good test at all).
Godspeed on your hobby/passion project/creative pursuit/meaningful work!
C-corporations are immune from the hobby loss rule. The Hobby loss rule applies to everything else - Individuals, Partnerships, Estates, Trusts,and S-Corporations.
Create a C-corp for podcasting, you can carry the Net Operating Losses forward indefinitely (due to 2017 new law) - so stack them up.
When the time comes, and you need a company to actually do something with, instead of creating a new company, refocus that company on its new purpose that is profit related, carry the losses forward to avoid income tax on the c-corp. When the company has income, you can eliminate up to 80% of your taxable income each year with losses from prior years. Or, you can have that company start doing something else in addition to your podcasting that generates income.
The C-corp can issue you dividends, which avoids payroll and income taxes, and instead is taxed at the cap gains rate, which is likely lower for you. So the money coming out is taxed very little due to the stacked NOLs and the money doesn't get all the taxes an LLC or S-Corp would once it goes to you.
This only works if you intend to have some sort of enterprise that makes money of course, or you already have one.
I know this because we had a company that lost money for quite a few years, which was a plan, because we were re-investing it back in and I got this advice from a CPA that seemed to be 100 years old. Back then you could only carry the loss forward for 20 years however.
I love your podcast because it's entertaining, thought-provoking, helpful content. I also low key enjoy reminding my family that I actually know Paul Ollinger IRL (I show them the printed email thread between you and Maradi where I'm cc'd) when the 4 of us listen to CM on roadtrips.
IMO, it's just a matter of time until Crazy Money hits the Prof G. Podcast Singularity. Until then, having it as a loss leader for your stand-up LOB is smart strategy. I'd suggest getting a good marketing science person to help you tune your attribution model if you and the IRS aren't seeing it pencil out.
Great article - this is not a hobby for you, no way. --- When I think about the carried interest loophole for hedge fund managers and juxtapose this against the hobby loss rule that beats up on everyday folks, it makes me think that our Congress is incompetent. (my attempt at dry humor)