Taking a loss

If you have done well with your investments, are looking at significant capital gains and your company or business is profiting , then prior to years end is the time to offset some of those gains. That is, you can hide your actual profit and even show a loss by selling a losing venture.

You should also remember that you can carry forward up to 3,000 dollars from previous years’ losses. So basically if you show that your company is making losses, even when its not, you can end up saving a lot of taxes on the profit your company is making.

While showing losses of previous years will also help you to save at least some amount of tax.

This technique is generally helpful for those people or companies whose net turnover is very high, and, by showing that they are not actually making profit, these companies can save up to a lot of money.

For example, suppose for companies the savings on taxes is 1%, when they show that they are at a loss. Also, remember to assume that the taxable income of small companies is 100,000 $, and for big companies the taxable income is 1 million $. So the small companies save Rupees 1,000 $ on taxes, while the big company saves Rupees 10,000$.

So, to summarize, for the same rate of savings, big companies can save more than the small ones.