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It’s very similar to how smaller businesses write off trucks and equipment. You’re friend would have to rent the yacht and pay taxes on that as a company like normal. The equipment when bought can be written completely off that year, or depreciated over time. So I spend 100k on a truck and decide to write it completely off I now have 100k write offs. The company can profit 100k without paying taxes and the company has now just broken even. You keep the 100k in your account. But, when I make payments on the truck, I will not be able to write that off next year or any year after that for that vehicle. So I buy another truck. Other way is depreciation over time. The truck losses let’s say 15k a year. The company gets a 15k write off, so it gets to keep all 15k in profit. It’s kicking the tax can down the road in a way, but gets companies to pump money into the economy.
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Owned my own business for 15 years and counting. Gotta dumb it down for Reddit. If you’re interested you can check out section 179 for reference.