# Income can be IRS-taxed only once, correct? **URL:** \ **Category:** Factual Questions\ **Created:** [May 15, 2015, 12:29pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101 "2015-05-15T12:29:15Z")\ **Posts on this page:** 14\ **Page:** 4
**Author:** ![Nars\_Glinley](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nars_glinley/32/8177_2.png) [@Nars\_Glinley](https://boards.straightdope.com/u/Nars_Glinley)\ **Post date:** [May 17, 2015, 11:19pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/61 "2015-05-17T23:19:38Z")
In some localities (mine included) you can spend your $20,000 on new furniture (or any personal property) and then continue to pay yearly personal property taxes on it. ---
**Author:** ![LynnM](https://avatars.discourse-cdn.com/v4/letter/l/b2d939/32.png) [@LynnM](https://boards.straightdope.com/u/LynnM)\ **Post date:** [May 18, 2015, 2:05am UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/62 "2015-05-18T02:05:29Z")
> [@Nars\_Glinley](#): > > In some localities (mine included) you can spend your $20,000 on new furniture (or any personal property) and then continue to pay yearly personal property taxes on it. Huh? ---
**Author:** ![Nars\_Glinley](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nars_glinley/32/8177_2.png) [@Nars\_Glinley](https://boards.straightdope.com/u/Nars_Glinley)\ **Post date:** [May 18, 2015, 2:39am UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/63 "2015-05-18T02:39:53Z")
It’s just like paying real estate taxes but instead of “real property” the taxes are assessed on everything that you own. So instead of being taxed doubly (or more) on the income, you are taxed perpetually on the value of the items that you purchased with the income. ---
**Author:** ![drewder](https://avatars.discourse-cdn.com/v4/letter/d/57b2e6/32.png) [@drewder](https://boards.straightdope.com/u/drewder)\ **Post date:** [May 18, 2015, 3:01am UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/64 "2015-05-18T03:01:34Z")
> [@DrDeth](#): > > Because we have hashed this out dozens of times with the same poster in Great Debates, over and over, with solid proof, yet he continues to make the same one line drive by posting. > > Thus, the same one line drive by posting is the only possible response without starting the same debate again, with the same links, the same cites, etc. It gets tiresome. > > It’s not double taxed as the Owner(s) has decided- mostly for tax reasons- to split himself into two legal entities- one business one personal. > > There are large tax benefits for so doing, especially as Dividends aren’t subject to Payroll taxes. You are mistaken in that I have never argued this with anyone in great debates or anywhere else. ---
**Author:** ![IvoryTowerDenizen](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ivorytowerdenizen/32/17937_2.png) [@IvoryTowerDenizen](https://boards.straightdope.com/u/IvoryTowerDenizen)\ **Post date:** [May 18, 2015, 3:41am UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/65 "2015-05-18T03:41:17Z")
> [@drewder](#): > > You are mistaken in that I have never argued this with anyone in great debates or anywhere else. I’m not sure DrDeth was talking about you, but I coukd be mistaken. ---
**Author:** ![grude](https://avatars.discourse-cdn.com/v4/letter/g/e47774/32.png) [@grude](https://boards.straightdope.com/u/grude)\ **Post date:** [May 18, 2015, 1:40pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/66 "2015-05-18T13:40:54Z")
> [@Nars\_Glinley](#): > > It’s just like paying real estate taxes but instead of “real property” the taxes are assessed on everything that you own. So instead of being taxed doubly (or more) on the income, you are taxed perpetually on the value of the items that you purchased with the income. Where do you live that there is a tax on personal property? I’m not talking about real estate but furniture? ---
**Author:** ![Nars\_Glinley](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nars_glinley/32/8177_2.png) [@Nars\_Glinley](https://boards.straightdope.com/u/Nars_Glinley)\ **Post date:** [May 18, 2015, 2:30pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/67 "2015-05-18T14:30:06Z")
> [@grude](#): > > Where do you live that there is a tax on personal property? I’m not talking about real estate but furniture? I live in Oklahoma but we’re not the only state that does it. See here: [http://taxfoundation.org/article/states-moving-away-taxes-tangible-personal-property](http://taxfoundation.org/article/states-moving-away-taxes-tangible-personal-property) ---
**Author:** ![IvoryTowerDenizen](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ivorytowerdenizen/32/17937_2.png) [@IvoryTowerDenizen](https://boards.straightdope.com/u/IvoryTowerDenizen)\ **Post date:** [May 18, 2015, 2:31pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/68 "2015-05-18T14:31:12Z")
> [@grude](#): > > Where do you live that there is a tax on personal property? I’m not talking about real estate but furniture? When I lived in Connecticut our cars were taxed as personal property every year (and yes, we paid sales tax on them when we bought them). ---
**Author:** ![CurtC](https://avatars.discourse-cdn.com/v4/letter/c/ce73a5/32.png) [@CurtC](https://boards.straightdope.com/u/CurtC)\ **Post date:** [May 18, 2015, 3:44pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/69 "2015-05-18T15:44:37Z")
> [@LynnM](#): > > So if you’re filling out a form that requires reporting of all income in a year, if during that year you sold $20k of a mutual fund, that $20k is \*\*not \*\*regarded as income, because it was already income at the time you received it. After you received it, paid taxes on it, and invested it, it can’t be regarded as “income” again. I’m not sure this specific question has been answered among all the tangents about corporate taxes and inheritance taxes, and it’s the info that LynnM was looking for in the OP. LynnM, if you take $100k from your savings, money which you’ve already paid income tax on, and invest it in a mutual fund, then your _cost basis_ for those shares of the fund is $100k and you get to subtract that from the sales price when you report your income. However, if one year you sell just a portion of those mutual fund shares, then you just get to subtract a portion of the $100k that you initially invested. Let’s say that the mutual fund that you paid $100k for has gone up in value to $150k, and one year you sell **one-fifth** of it. That year, on your tax forms, you report the $30k for the sales price, but get to subtract the cost basis of $20k that you paid for it, resulting in a net taxable income of $10k. What’s happening is that each share of the stock is treated separately - those shares that you sold for $30k are the shares that you paid $20k for in the past. You don’t get to subtract out the whole $100k right from the start - it’s apportioned out to the amount of shares that you have, and you get to subtract the purchase price for however many shares you sell. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [May 18, 2015, 6:38pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/70 "2015-05-18T18:38:06Z")
> [@IvoryTowerDenizen](#): > > I’m not sure DrDeth was talking about you, but I coukd be mistaken. I was talking about\*\* jtgain,\*\* and others. It’s a common incorrect meme. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [May 18, 2015, 9:09pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/71 "2015-05-18T21:09:31Z")
A timely (for this thread) [ruling](http://www.washingtonpost.com/local/md-politics/supreme-court-rules-maryland-income-tax-law-is-unconstitutional/2015/05/18/1e92ee7a-d16f-11e4-ab77-9646eea6a4c7_story.html) from the Supreme Court on one aspect of double taxation. The court ruled that one aspect of Maryland income tax law is unconstitutional, because it does not provide a full tax credit to residents for income tax paid outside the state. This particular form of double taxation violated the Commerce Clause, because it impermissibly interfered with business across state lines. ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [May 18, 2015, 9:14pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/72 "2015-05-18T21:14:33Z")
> [@DrDeth](#): > > I was talking about\*\* jtgain,\*\* and others. It’s a common incorrect meme. While we’re fixing these kinds of misconceptions, let’s point out that black people are more of a brown color, while white people range from pink to tan, unless they’ve been out in the sun for too long, in which case they’re red. Restrooms are not used for resting. You drive on parkways and park on driveways. Also, green paint doesn’t exist because it’s just a combination of yellow and blue. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [May 18, 2015, 9:51pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/73 "2015-05-18T21:51:24Z")
> [@dracoi](#): > > You drive on parkways and park on driveways. [http://www.straightdope.com/columns/read/410/why-do-we-drive-on-the-parkway-and-park-on-the-driveway](http://www.straightdope.com/columns/read/410/why-do-we-drive-on-the-parkway-and-park-on-the-driveway) :p:D:p:D ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [May 20, 2015, 9:57pm UTC](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101/74 "2015-05-20T21:57:36Z")
> [@DrDeth](#): > > Because we have hashed this out dozens of times with the same poster in Great Debates, over and over, with solid proof, yet he continues to make the same one line drive by posting. > > Thus, the same one line drive by posting is the only possible response without starting the same debate again, with the same links, the same cites, etc. It gets tiresome. > > It’s not double taxed as the Owner(s) has decided- mostly for tax reasons- to split himself into two legal entities- one business one personal. > > There are large tax benefits for so doing, especially as Dividends aren’t subject to Payroll taxes. Huh? The corporation pays taxes, and then pays out dividends, as income, on which the individual receiving is taxed. However, if the US system is like the Canadian system (or more likely is more generous) The sum of corporate taxes and personal income tax on dividend income was such that for “personal service” corporations (I.e. Joe’s Consulting Inc. fronts for Joe) the total tax paid worked out to be pretty much the same. As an accountant explained to me, the question was whether the liability protection etc. was worth the paperwork of maintaining and reporting for the corporation. then of course, the government will do various tricks to help push investment in the right direction, thus giving an even better break to dividends sometimes. [Previous page](https://boards.straightdope.com/t/income-can-be-irs-taxed-only-once-correct/720101.md?page=3)