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In order to claim a capital loss on your taxes, you have to sell. No point in holding something that's going nowhere.
by gridlockd 7y ago
In order to claim a capital loss on your taxes, you have to sell. No point in holding something that's going nowhere.
- charlesdm 7y agoMind, for a VC. A VC needs at least 100x on their investment. You don't realistically get that unless you invest very very early or you exit to a strategic acquirer, and most acquisitions aren't by strategic acquirers. That stake was likely worth hundreds of thousands if not millions of dollars, but to KPCB it wasn't worth the hassle to find someone willing to pay that. They know they make a loss on most of their investments.
- erichurkman 7y agoThere's a small cottage industry of purchasers who will buy heavily depressed for chump change. It can be strategic to help offset other gains in a tax year. The purchaser collects a service fee and a lottery ticket for the random "XYZ Inc sold patent to IBM for $10 million during company liquidation."
- 55555 7y agoCan you explain more please? I dont understand. If I buy a thing that was once worth 100 million dollars for 10 million dollars, I havent lost anything yet because it would need to go down even further from 10, right?
- KMag 7y agoThe seller's main utility in selling is to realize the losses for tax purposes. The buyer isn't buying for tax offsets. They're buying at deep discounts because they're often the only bidder and the hope that they occasionally find themselves taking on some asset for which the sellers have vastly underestimated the value (such as some obscure patent).