I work as an independent consultant and am planning revenue allocations for next year. I have an S-Corp for the consulting company and started a C-corp recently for a separate startup. The S-Corp is my main source of income, I have been in the industry for a few years, and have a good idea of what to expect in terms of Sales and Operational costs.
I'd like to use some of the revenues from the S-Corp to reinvest into other business services and products, including the C-Corp and technologies used by both corporations. Here is a list of some of the things I'd like to put money towards:
a) Savings of 12 Months Operating Expenses
b) R&D in business-related software
c) R&D in a separate business venture
d) Operations in the separate business venture mentioned in option c
e) Acquisitions of smaller competitors
f) Commercial Real Estate
Question 1: Which of the above are subject to State and Federal tax?
Question 2: What is tax liability if expenses go towards a completely different business, trade, or industry venture? (Example 1: McDonalds Revenue from one store spends $500,000 on R&D and Operations for food delivery technology startup. Example 2: Same McDonald's store invests money on a Pet Shop.)
Here is my understanding on how the above entries are taxed (please correct me if I'm wrong and or offer other tips):
a) Revenues are taxed and the remaining amount is counted as Profit. Any business savings should come from its profits (which naturally undergoes taxes).
b) Operational Expenditure
c) Operational Expenditure
d) ? Operational Expenditure or Post Revenue Investment?
e) Capital Expenditure
f) Capital Expenditure
My understanding is that capital expenditures are also accounted over a period of time as a write off based on the long-term value of that investment.