now i see where they are/were going not a good place
http://blogs.forbes.com/eco-nomics/2011/03/28/could-medical-marijuana-get-the-al-capone-treatment/?partner=relatedstoriesboxCould the IRS use the tax code to shut down medical marijuana dispensaries?
In 1931, mobster Al Capone was finally put behind bars because he was convicted of multiple tax-evasion charges, and the IRS is taking a similar approach with medical marijuana today. Many dispensaries in California now face audits that could result in their owing millions of dollars in back taxes.
According to Forbes columnist Robert W. Wood, the agency is relying on Internal Revenue Code Section 280E, which “precludes deductions for any business trafficking in controlled substances.” While dispensaries are legal in some states, including California, marijuana trafficking remains illegal on a federal level. The IRS is arguing that normal business expenses that most companies can deduct on their taxes are not applicable to dispensaries.
The Marin Alliance for Medical Marijuana in Fairfax, Calif., was the first dispensary to be hit with this ruling earlier this month. Founder Lynette Shaw told the Marin Independent Journal of California that the IRS audited the company’s returns for 2008 and 2009 and disallowed all of the alliance’s business deductions such as buying marijuana, hiring employees, and renting office space. Shaw did not disclose the amount the IRS told her she owes, but she described it as “a staggering sum” totaling several million dollars.
“Every dispensary in the nation, past, present and future is dead if this is upheld,” Shaw said. An IRS spokesperson declined to discuss the case. Shaw is currently planning an appeal.