Tax Cut for Prepaid Expenses Pays Better Than Seen at First Glance
Prepaying selected expenses authorized by the tax law gets a bad rap.
Many business owners know that they can do this, but they pooh-pooh the results as not being worth the effort. That’s often due to faulty understanding.
Let’s start with the big picture. Say we hand you $30,000 next April 15 and tell you that you can pay it back anytime without interest. Would you take us up on the deal?
Say you invest this $30,000. Say you invest it at the following rates of return (after taxes) and for the following time periods:
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