How Not to Run an RV Park

westernrvparkowner wrote:

JFNM wrote:
The business MAY be a tax write off for the owner! :-)

I remember a story from a few years ago. A rich fellow bought a ranch and hired an old hand to run it. At the end of the first year, the old hand showed the owner that he had made a bit of money and the owner was furious. Told him to never, ever turn a profit again.

The entire "tax write off" thing is basically urban legend. The IRS requires a business to periodically earn a profit, otherwise it is considered to be a hobby and the expenses against that hobby are not eligible to be written off. Furthermore, the maximum write off against a loss would be the highest marginal tax rate, currently 39.6 percent. Thus even a tax write off would still amount to a 60.4 percent real loss, not very good business. Yes, there are ways to massage the tax code in your favor. You can buy items within your business that are really primarily for personal use and write them off. You can push tax obligations into the future by taking depreciation and the like. But the IRS eventually gets their money and just plain running a business at a loss isn't a tax strategy.
And what is wrong with a business having employees? How is the OP so involved in the day to day operation of that park allowing him to KNOW that having 7 employees is too many, assuming of course the lawn maintenance person was actually an employee of the park and not an outside contractor who mows the park on Tuesday? I know I have more than that and I consider myself to run a very lean operation.

Well RVParkowner you and I don't often agree, but in this case you are right about one thing and that is the Urban myth of the tax write off as business. This is usually only the domain of those businesses that have Billions of dollars in cash that needs to be spent and they can ride out the non-proitable years of a business startup.

However you are mistaken about the IRS demanding that you make a profit. Amazon has yet to be profitable. What the IRS does demand is careful bookkeeping and accounting. You can lose your shirt for all they care as long as you are in compliance with the Tax Code.

As for my credentials to look at a business and see what is going on. That among other things is how I made a living for many years. And a very good one. I have taken more than one struggling company (Corp) from near bankruptcy to profitability. In one case in a mere 18 months. (This was a wholly owned subsidiary of Maxtor)

Most recently I have been working in helping Chinese companies move their factories to areas of the world with cheaper labor costs especially in SE Asia.

I think my business credentials at least equal yours.