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Federal Taxation of Marijuana Sellers (CRS Report for Congress)

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Release Date Nov. 11, 2014
Report Number LS_2014-11-11_01
Report Type Legal Sidebar
Authors Heitshusen, Valerie
Source Agency Congressional Research Service
Summary:

''As several states have permitted the use of marijuana for medical and recreational uses, one question that arises is what are the federal income tax consequences for businesses that sell marijuana? There is no question that income from selling marijuana is taxable to the seller, regardless of whether such sale is legal or not under federal or state law. The Internal Revenue Code (IRC) uses a very broad definition of income, and income is taxable whether it comes from legal or illegal activities. Further, it can be taxed even if the proceeds are forfeited to the government. While such income is taxable, the seller will be limited in its ability to deduct business expenses.''