>> Not exactly. It's a well-established accounting principle that you capitalize costs that provide a benefit over multiple years.
OK, so lets flip this. I'm a founder working for free, as many founders do. We code on nights and weekends and produce hundreds of thousands of dollars of capital value. If the business doesnt work out, can I claim all this as a loss?
We cant have it both ways, can we? So I should be able to take losses on these hundreds of git repos I have with thousands of hours of unpaid work?
Technically, I would assume that you probably can claim this as a capital loss if you have actually realized a loss (eg you spent money on software related to the business or something), but those are capped at $6,000 a year. Those expenses previously could have gone on a schedule C, though.
The gains on taxes are uncapped, but the losses are capped per year. I think if you have a bigger loss, you can carry it forward even as an individual and apply it against future gains (or take another $3000 deduction). Apparently the limit is $3000 for married couples, I thought it was $3000 for individuals.
It's $3k period, for offsetting normal earned income. There is no cap on offsetting capital gains (for example, from selling stock). And you can do both, e.g. wipe out for example $20k in capital gains then another $3k in normal income.
I sold a business at a $60k loss 4-5 years ago and between capital gains offsets and normal income deductions I still have about $30k in deductions left.
Founders work for free because they're investing, taking a risk like all investments. If they lose the bet, they lose. No harm, no foul. That's true of any investment you and I make. People lose money on investments every day.
There are a lot concepts being not very well defined here: employment, investing, taxation, salaries. It's not all one thing.
What is it that you think "we" are having both ways?
OK, so lets flip this. I'm a founder working for free, as many founders do. We code on nights and weekends and produce hundreds of thousands of dollars of capital value. If the business doesnt work out, can I claim all this as a loss?
We cant have it both ways, can we? So I should be able to take losses on these hundreds of git repos I have with thousands of hours of unpaid work?