I almost feel embarrassed asking these questions as a newbie to the business world, but here goes:
1. When looking at a company's Net profit, how much of that would be taxed Federally? I know there is also State tax to be subtracted depending where the business is. Let's say a business is doing $1M in profit. Is there a set rule for tax deduction?
2. If the company is paying a 500k per year loan, am I correct in assuming that only the interest portion of the loan is tax deductible? For example if the loan is at set at 5% interest, only 5% of the $500,000oan per yearis deductible? ($25,000). So that would reduce the Net profit to $925,000?
Newbie question
by a searcher
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2) Only the interest portion of the debt service will reduce your taxable income.
3) In a leverage buyout, the taxable income is, or can be, very low. There are other deductions like depreciation, goodwill amortization, etc.
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