So, Colorado just become another state in 2014 to legalize the sale of pot.
More and more states are legalizing the use of pot. I’ve even had a few people approach me about what might be involved in setting up a legitimate pot growing business in New Hampshire.
For one, it’s against the law in New Hampshire. But the big problem, if you go and set yourself up in a ‘legitimate’ state, is that it is still against Federal law.
Let me explain why this is a problem for taxes. Some might assume (what’s the big deal) that I’ll just set up my business, consult with tax preparation services, and make sure I pay my taxes…Simple enough?
Here’s the problem. Although you are required to report your income from whatever source, you are NOT entitled to take a single dollar of deduction against that income if the business is illegal.
So, if you had a pot growing business with $300,000 of gross sales, and you had $200,000 of expenses associated with it, you would have to pay taxes on the whole $300,000.
…and now you know…
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Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.