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  1. Default Re: Restaurant closings

    Quote Originally Posted by chuck5815 View Post
    Just seems like there are about 2x more restaurants in place than the MSA can actually support.
    Agreed. I think it's inevitable more closures are coming.

  2. #152

    Default Re: Restaurant closings

    Quote Originally Posted by chuck5815 View Post
    Just seems like there are about 2x more restaurants in place than the MSA can actually support.
    or bad business owners. lets go back and look at PDQ... they didn't just close their stores in OKC metro... they even closed the ones in DFW... so that closing had nothing to do with OKC.

  3. #153

    Default Re: Restaurant closings

    Quote Originally Posted by chuck5815 View Post
    Just seems like there are about 2x more restaurants in place than the MSA can actually support.
    There are FAR more fast food outlets per capita in OKC than Denver.

  4. #154

    Default Re: Restaurant closings

    Quote Originally Posted by mugofbeer View Post
    There are FAR more fast food outlets per capita in OKC than Denver.
    Well, that definitely makes senseóbut OKC has far more Fatties per capita than Denver too, and the Fast Food guys are well aware of that fact. But the bigger point is that an outsize share of folks with capital think they can make a restaurant work in OKC. One of my neighbors is a good example. Guy is a doctor with a very successful practice, and he decides to open a new cajun restaurant in the city. I told him, ďHey, dude, youíre going to lose your ass on this deal.Ē And he opened it anyway. From what I hear, business has been absolutely terrible and they arenít even close to making the thing cash flow. They even resorted to Groupons, it is so bad. So yea, I think there are a large number of wealthy folks seeking to diversify away from an expensive stock market by lighting big barrels of money on fire in the restaurant business. A bunch of regular Hal Smiths, if you will.

  5. Default Re: Restaurant closings

    Some folks with *considerable* disposable operate a business like a restaurant purposely at a loss for several years as a tax shelter. I believe you can operate a business at a loss for a certain number of years and write off some of the loss (within constraints). Most folks doing this will operate the business for the time allowed, and when the exemption runs out, they close it down. I think Barry Switzer put a bunch of money into (at least) two different restaurants that, after a few years, quietly failed and then disappeared.

  6. #156

    Default Re: Restaurant closings

    Quote Originally Posted by SoonerDave View Post
    Some folks with *considerable* disposable operate a business like a restaurant purposely at a loss for several years as a tax shelter. I believe you can operate a business at a loss for a certain number of years and write off some of the loss (within constraints). Most folks doing this will operate the business for the time allowed, and when the exemption runs out, they close it down. I think Barry Switzer put a bunch of money into (at least) two different restaurants that, after a few years, quietly failed and then disappeared.
    You donít intentionally lose money in business so you can take the tax loss. Doesnít work that way.

  7. Default Re: Restaurant closings

    lmao

  8. #158

    Default Re: Restaurant closings

    Quote Originally Posted by CloudDeckMedia View Post
    You donít intentionally lose money in business so you can take the tax loss. Doesnít work that way.
    you don't work with people who own multiple businesses a lot then, do you?

  9. Default Re: Restaurant closings

    Quote Originally Posted by CloudDeckMedia View Post
    You donít intentionally lose money in business so you can take the tax loss. Doesnít work that way.
    LOL I guess you live in Fantasy land. Whatever, dude. I know better. Have a good one.

  10. Default Re: Restaurant closings

    Quote Originally Posted by jedicurt View Post
    you don't work with people who own multiple businesses a lot then, do you?
    LOL spot-on

    I was naive about businesses not deliberately losing money I was kinda laughed at once and then someone explained to me how some rich folks hide some of their income, like doctors letting spouses run nonsense side-businesses for a few years. I will say that apparently the IRS cracked down on some of this a few years ago, putting limits on some losses, but the practice is still apparently pretty prevalent. I don't have that kind of cash, so it doesn't affect me LOLOL 😁

  11. #161

    Default Re: Restaurant closings

    Quote Originally Posted by SoonerDave View Post
    LOL spot-on

    I was naive about businesses not deliberately losing money I was kinda laughed at once and then someone explained to me how some rich folks hide some of their income, like doctors letting spouses run nonsense side-businesses for a few years. I will say that apparently the IRS cracked down on some of this a few years ago, putting limits on some losses, but the practice is still apparently pretty prevalent. I don't have that kind of cash, so it doesn't affect me LOLOL 😁
    Eh, it's a lot more complex than this... it doesn't make sense for someone to intentionally lose $1 to save $.35. Now, it might make sense if you're able to put a lot of non deductible expenses under one of the businesses and then declare a loss. However, that's technically illegal (although it does happen). You can't operate a business in order to declare a loss. The IRS does look at intent. https://www.irs.gov/pub/irs-news/fs-07-18.pdf

    However, having a spouse open up a side home business to enable for additional deductions is one thing. Opening up a business and intentionally sinking actual money (non virtual paper losses) makes no financial sense. You can only take a loss so many times before the IRS considers you a hobby. And you still had to take a loss.

    So for example, I spend a lot on photography equipment, and do a lot of photography. I could establish a business and write off my equipment. So making a loss there would save me money (although it would increase the chance for an audit, and wouldn't technically be legal). However, if I started dumping real expenses in there like a storefront and such, then it wouldn't make financial sense. Even in the former case, it's only offsetting a percentage of money I was going to spend anyways. It wouldn't make financial sense to get into photography as a way to lose money and save on taxes. This is similar to people who claim that those who make charitable donations are just doing it to "save" money on taxes. Yes, you'd lower your tax bill, but your total out of pocket is significantly higher.


    None of this is meant to include those who operate business to launder money. I know of a few restaurants/bars in OKC (although most of them are gone now) that operated only as money laundering operations.

  12. #162
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    Default Re: Restaurant closings

    Quote Originally Posted by SoonerDave View Post
    LOL I guess you live in Fantasy land. Whatever, dude. I know better. Have a good one.
    You would have to be really stupid or doing something illegal to purposely operate at a continual loss in order to take that loss to save taxes. What many people think of, but don't understand, is that you may be able to buy an ongoing concern that has accumulated losses that can be carried back, forward, or used currently, in order to offset current gains. It can be complicated and the seller is still in a loss situation. The idea that anyone trades a loss for a significantly less tax savings is nuts.

  13. Default Re: Restaurant closings

    Quote Originally Posted by Rover View Post
    You would have to be really stupid or doing something illegal to purposely operate at a continual loss in order to take that loss to save taxes. What many people think of, but don't understand, is that you may be able to buy an ongoing concern that has accumulated losses that can be carried back, forward, or used currently, in order to offset current gains. It can be complicated and the seller is still in a loss situation. The idea that anyone trades a loss for a significantly less tax savings is nuts.
    I don't remember the details, but it was explained to me very matter-of-factly as a tax dodge years ago and something that was fairly routinely done. As I said, I don't travel in those financial circles so I can't vet the accuracy of it, maybe it was total BS, but I'm also sure they didn't explain every subtlety of detail.

    Anyway, I'll leave this discussion to others who know more about it. Didn't intend to derail the topic off restaurant closures.

  14. Default Re: Restaurant closings

    I will just say that there are businesses out there that generate losses that aren't necessarily losses. Let's keep it simple as I just came from office party and having to focus on keyboard. Say I am a hobbyist coin collector and I spend 5k per year visiting trade shows in Vegas because I am serous about my hobby. I spend another 10 k per year buying stuff for my collection. I am spending 15k per year on my hobby. I open a coin shop and have 50k in sales but have 50 k in salary, rent, expenses. I broke even or maybe lost a little. But throw in 15 in other expenses that I was already spending on my hobby which is now a business (or social bills drinking or eating out if you own bar) and all of the sudden you have a net loss on your business far greater than what you actually spent on the business.

    Call me crazy or stupid but I know my tax bill is lighter due to certain restaurant investments and the result is a net gain. (and I use an hard nose CPA who cuts me no slack because I am way too pretty for jail)

  15. #165
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    Default Re: Restaurant closings

    Quote Originally Posted by Jeepnokc View Post
    I will just say that there are businesses out there that generate losses that aren't necessarily losses. Let's keep it simple as I just came from office party and having to focus on keyboard. Say I am a hobbyist coin collector and I spend 5k per year visiting trade shows in Vegas because I am serous about my hobby. I spend another 10 k per year buying stuff for my collection. I am spending 15k per year on my hobby. I open a coin shop and have 50k in sales but have 50 k in salary, rent, expenses. I broke even or maybe lost a little. But throw in 15 in other expenses that I was already spending on my hobby which is now a business (or social bills drinking or eating out if you own bar) and all of the sudden you have a net loss on your business far greater than what you actually spent on the business.

    Call me crazy or stupid but I know my tax bill is lighter due to certain restaurant investments and the result is a net gain. (and I use an hard nose CPA who cuts me no slack because I am way too pretty for jail)
    Of course you can do that, and people do. If you aren't particularly concerned about the ethics of it, or even the risk of having non-legit personal expenses discredited in audit, it may work... for awhile. But the IRS has been rightfully cracking down on "hobby" businesses used to cover personal expenses as business expenses. If anyone tells you they will spend $250,000 to set up a business so they can write off $20,000 a year in illegit expenses, maybe saving them $5-6,000 in taxes, then they are full of it.

  16. #166

    Default Re: Restaurant closings

    Quote Originally Posted by jedicurt View Post
    you don't work with people who own multiple businesses a lot then, do you?
    I DO own multiple businesses, and have over the years. Please share the math showing that a $1.00 loss in EBIDTA results in more than $1.00 in tax savings, and that it results in MORE money in your pocket at the end of the day, not less. If you're talking about ACRS, bonus depreciation and the like, that's different and not consistent with the broad sentiment, "rich people lose money because of the tax writeoff."

  17. #167

    Default Re: Restaurant closings

    Quote Originally Posted by Rover View Post
    You would have to be really stupid or doing something illegal to purposely operate at a continual loss in order to take that loss to save taxes. What many people think of, but don't understand, is that you may be able to buy an ongoing concern that has accumulated losses that can be carried back, forward, or used currently, in order to offset current gains. It can be complicated and the seller is still in a loss situation. The idea that anyone trades a loss for a significantly less tax savings is nuts.
    Yes to this. I owned an LLC which owned a single asset which had been almost fully depreciated, and a buyer made an offer. If I sold her the asset, the depreciation would be recaptured and I'd have a tax liability, but if I sold her the LLC, the tax liability would pass to her and I wouldn't owe a penny. I offered the latter, which she smilingly declined, and we closed the deal.

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