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Exact(5)
Even the skinflints at the IRS gladly accept as ordinary deductions payments made in stock.
One is that it turns the $100 into ordinary deductions (as an offset to interest income from the bond) that you'll claim on Schedule B for bonds acquired after 1987.
Some other ways to address this are to set a high-income threshold for the tax to apply, say $500,000 per year and up, and eliminate, in the AMT calculations, the ordinary deductions and exemptions people take for themselves, their spouses, their children, their state and local income and property taxes, and the standard deductions.
AI researchers (like John McCarthy) who used logic discovered that they could not represent ordinary deductions that involved planning or default reasoning without making changes to the structure of logic itself.
Keep in mind that the IRS views your real estate investment efforts as a business so you also get to claim the "necessary and ordinary" deductions that business owners take, including mortgage interest, insurance, and maintenance expenses.
Similar(55)
As with any capital loss, it is first deducted from capital gains then up to $3,000 can be an ordinary deduction, with the rest carried forward.
TechGiant might lose out a bit on the other side of that transaction, as it would be trading an immediate ordinary deduction for compensation for an acquisition expense that would likely be amortized over 15 years.
Unfair, because the poor fellow who bought the bond for $1,000 and sold it at a loss to you gets a capital loss, not an ordinary deduction.
Instead of claiming the $37.60 price depreciation (per $1,000 face value) as a capital loss at maturity, claim it as a monthly amortization, an ordinary deduction against interest income.
Taxable investors might prefer to instead pay incentive fees that are economically similar but may generate ordinary tax deductions for investors and ordinary income for the manager.
To most ordinary people, taking deductions is a way of saving a few bucks.
Related(20)
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com