Nick Richards (Courtesy photo)
A combination of tax methods could help cannabis companies reduce their tax burden under Section 280E of the federal tax code.
If recent case law is applied equitably, the cannabis industry could be sitting on millions of dollars in unclaimed federal tax refunds.
The first, a method I call “the 280E asset,” is supported by very old case law and a recent federal claims court decision that barred the practice of deductions being recognized as basis.
Basis refers to a business owner’s investment in a business and that company’s investment in its assets.
For example, if a taxpayer buys an airplane for $1 million and then immediately sells it for $1.5 million, that’s a basis of $1 million and a gain of $500,000.
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The 280E asset accepts that Section 280E prohibits the deduction of costs that cannot be recognized as cost of
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