I mean, what the hell.
Are you telling me that if I earn $50k at one job, but lose $25k with my LLC, the IRS wanted to tax me on the full $50k? Was, up until this ruling?
What the hell?
Generally speaking, the US is a good place for business. I know that. But I look at stuff like this, and then the self-employment tax on top of income tax, and I go: what?
Don't rules like that only punish good, honest people anyway?
I like how, at the end of the article, they mention that lots of people get out of the self-employment tax by showing their partner status in an LLC. WHAT? Is that legal? What does that even mean?!?
As to your hypothetical, though, my curiosity is piqued:
Let's say the Household's businesses are losing $250k a year of the Household's money.
Why should they pay tax on $500k of income? Their income is $250k in your hypothetical.
If the businesses ARE losing money, then the household as a unit has less income, so why not tax the household on its actual income?
It seems that this ruling has expanded the definition of the active investor beyond where IRS wanted to see it.
