Taxprof has this today:
Forbes: Voters Say Yes to Marijuana, IRS Says No, by Robert Wood
A total of 18 states and the District of Columbia have legalized medical marijuana. Massachusetts just came on line after the November 6, 2012 vote. Colorado and Washington just went further to legalize recreational use too.
But can a legal dispensary operate like a “legitimate” business? Amazingly, they can’t and are still labeled as drug traffickers. ... no matter how “legal” the states make it the IRS is federal and that means trouble. American businesses pay tax on their net not their gross income and business expenses are as American as apple pie. But Section 280E of the tax code denies deductions for any business trafficking in controlled substances. This black letter rule to stop drug dealer tax deductions also covers medical marijuana since federal law still classifies it as a controlled substance.So the obvious question is, if it comes to pass that marijuana businesses can survive and even thrive under gross-basis taxation what will we then say about the taxation of business income more generally?
I'll even put it in multiple choice format for you.
(a) it turns out deductions for business expenses are not, after all, as American as apple pie.
(b) business deductions are still as American as apple pie, but not as American as ganja consumption.
(c) business deductions are as American as apple pie, but not necessary to the continued production of optimal amounts of apple pie once Americans get their hands on the dino koosh
(d) what does any of this have to do with pie? I thought we were supposed to eat Cheetos.
(e) all of the above
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