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Income Taxes

Income Taxes are slightly more tricky because most people only see themselves paying them. If your Taxable Income is a gain (positive number), then you will have to pay Income Taxes on this gain and thus the Income Taxes amount is a negative amount. However, if your Taxable Income is a loss (negative number) then you can save money by reducing your taxes and thus the Income Taxes amount is added to the Cash Flow to reflect this savings. Income Taxes are calculated by simply multiplying Taxable Income by the Overall Tax Rate (federal plus state tax rates).

Remember, whenever regarding taxes and losses you must always consider whether the Passive Loss Rules apply.

For example:

Taxable Income = $5,663

Overall Tax Rate = 28% + 4% = 32%

Then $5,663 * 32% = $1,812

Because Taxable Income was a gain, Income Taxes are ($1,812)