If corporations can claim loss of $600 million and a person can claim loss of only $3000 per year, then what if we operate as Corp2Corp or 1099?

These are two separate categories of tax compliance, and there are many many categories of tax compliance.

The article is referring to Net Operating Losses which is because it spends more than it makes. These come with the feature of "carry forwards", which means they can be used against income in future tax years. The primary advantage is that they don't have to use their own cash to spend more than they make. They can use money they borrowed that year to spend more than they make, they can spend their shares in exchange for goods and services (many people would gladly take Amazon shares), and they also have international assets that are depreciating.

An individual can do similar things, if the market tolerated it, which the market does not.

The "$3,000 per year" is in reference only to capital losses in excess of capital gains, which refers to losing when trading in the capital markets.

Part of the game is to convert all activities into Net Operating Losses, and it is indeed possible to bump your capital loss transactions into ordinary income losses under the parallel Section 475 tax code.

There are many non-default tax codes that exist in parallel, which the IRS will gladly help you elect and will gladly view as a form of compliance.

1. Note that you don't even have to bother forming an S-Corp (or even an LLC) to be self-employed. All you do is tick the self-employed box when you use taxact.com or whatever to file your taxes.

2. To do what you're saying you have to indeed be a business. (IE: you have to be self-employed.) You can't be an employee. Note that Amazon is not an employee, it is a business.

3. So say you're a game animator and you work for Disney or such. So you are a normal employee. Step 1, quit your job and become self-employed.

4. Now you're a business.

5. Now, when you fill in your taxes - sure - just like any business you subtract your costs. (For example buying computers and so on.)

6. If you lose money one year - you won't have to pay any tax. Note that that is not a good thing :)

7. Imagine your animation business grew and you had four employees. Perhaps they make 50k each. Your business brings in 200k that year. Amazingly you can indeed pay the four employees, and visibly you have lots of clients and lots of business. But (bad news for you personally!) you lose money. (You have to borrow or whatever, hoping it will come good in coming years.) As you can see, it is non-mysterious that the company would pay no tax (or even have "negative tax") even though the company is growing.

In short, you can enact your scheme instantly ("become a company") - and millions of people in the US do exactly that. It's commonplace. And then yes, you're a business and your costs are costs. (However, there's nothing good about having "no income" !)

Don't forget, the humans that own Amazon, pay mountains of taxes. Nobody is "getting out of taxes" via what you describe. In the "animation" example above, your four employees would be paying mountains of taxes.

The IRS does not want you to avoid the $3,000 limit for applying net capital losses to ordinary income. One way the IRS dissuades you is by defining what it means to be in the business of trading, according to an accounting provider:

To determine whether an individual is in the business of trading, as a Sole Proprietor, the IRS looks at three main factors.

• You must seek to profit from daily market movements in the prices of securities,
• Your trading activity must be substantial, and
• You must carry on the activity with continuity and regularity.