4 ms·

OP here. A few readers mentioned versions of this. Am correcting. (IRS would likely try to stagger in some way. But there's basically no good system for doing t

OP here. A few readers mentioned versions of this. Am correcting. (IRS would likely try to stagger in some way. But there's basically no good system for doing this, and you're going to cause roughly the same selling pressure no matter how you go about it. But agree that my framing was rushed/bad here for this bullet.)

SilasX 5y ago
Awesome! Thanks for listening!
- Dracophoenix 5y ago
  The stock market is not all public. Stocks can be sold privately, (i.e. private contracts, stock bartering) or trading private collaterizable assets (i.e stocks in private companies). What you see on CNBC is the average buying price what people are willing to purchase on the public market. How do you go about valuing those transactions?
lupire 5y ago
A forced selloff doesn't destroy wealth; it improves price discovery of the assets that were previously hidden withheld from the market and overvalued. The GME HODLing "apes" aren't creating wealth either, just transferring it
toast0 5y ago
So if you require mark to market (as of the last day of the tax year), and then everyone subject to that waits until April 10th to sell (and then when the sales clear, sends in their taxes), that would let people know the right day to buy is April 10th, and this new flood of buying would act against the flood of selling. Also, the IRS wants quarterly estimated taxes, so that you don't owe a lot in April. The TLDR of the rules is if you owe more than 10% in April, you did it wrong and you'll pay a penalty subject to details I'm leaving out. That would tend to move from one sell day to four sell days throughout the year. And some people like to get things done early, or have offset tax years or notice a trend that selling for Q2 estimated taxes the day after Q1 estimated taxes are due gets a better price, etc. In short, I wouldn't worry too much over this. Mark to market rules for things that aren't so easy to price would be a much bigger concern.
- nullc 5y ago
  Mark to market isn't a panacea, even if you ignore the considerable costs it creates. In some cases people are already required to mark some assets to market, doing so ends up causing to have large losses which wipes out their income entirely in some years. ... again resulting in some years with no tax in spite of being wealthy -- it's ultimately offset with higher taxes later, but in some individual years you end up with the same issue the article is complaining about but actually created by the MTM. If that surprises you, realize that when you've marked an asset to market at a higher price-- you've also increased its cost basis to that higher price, so if it returns to the price you bought it at you now have a loss. Without the MTM at that point you'd simply have no gain, but not a loss. (and if you don't allow writing of the loss you've created an utterly ruinous cost for owning any risky-- or even merely volatile asset)

SilasX 5y ago

Awesome! Thanks for listening!

Dracophoenix 5y ago
The stock market is not all public. Stocks can be sold privately, (i.e. private contracts, stock bartering) or trading private collaterizable assets (i.e stocks in private companies). What you see on CNBC is the average buying price what people are willing to purchase on the public market. How do you go about valuing those transactions?

lupire 5y ago

A forced selloff doesn't destroy wealth; it improves price discovery of the assets that were previously hidden withheld from the market and overvalued. The GME HODLing "apes" aren't creating wealth either, just transferring it

toast0 5y ago

So if you require mark to market (as of the last day of the tax year), and then everyone subject to that waits until April 10th to sell (and then when the sales clear, sends in their taxes), that would let people know the right day to buy is April 10th, and this new flood of buying would act against the flood of selling. Also, the IRS wants quarterly estimated taxes, so that you don't owe a lot in April. The TLDR of the rules is if you owe more than 10% in April, you did it wrong and you'll pay a penalty subject to details I'm leaving out. That would tend to move from one sell day to four sell days throughout the year. And some people like to get things done early, or have offset tax years or notice a trend that selling for Q2 estimated taxes the day after Q1 estimated taxes are due gets a better price, etc. In short, I wouldn't worry too much over this. Mark to market rules for things that aren't so easy to price would be a much bigger concern.

nullc 5y ago
Mark to market isn't a panacea, even if you ignore the considerable costs it creates. In some cases people are already required to mark some assets to market, doing so ends up causing to have large losses which wipes out their income entirely in some years. ... again resulting in some years with no tax in spite of being wealthy -- it's ultimately offset with higher taxes later, but in some individual years you end up with the same issue the article is complaining about but actually created by the MTM. If that surprises you, realize that when you've marked an asset to market at a higher price-- you've also increased its cost basis to that higher price, so if it returns to the price you bought it at you now have a loss. Without the MTM at that point you'd simply have no gain, but not a loss. (and if you don't allow writing of the loss you've created an utterly ruinous cost for owning any risky-- or even merely volatile asset)