3 ms·

i really don't understand where the losses are coming from here. who is giving money to whom? and why isn't that clearer in an article about it?

deleted 4y ago
[deleted]
fn-mote 4y ago
> The main cause of the losses is said to be from loan-loss provisions (when a bank sets aside money as an expense for future loans it expects won’t be repaid). That is, credit is being extended to people who will not pay it back, resulting in (at the moment presumably x% hypothetical) losses for the bank.
- kaashif 4y ago
  That's interesting. So if I set aside capital for loan losses, I get to claim that as a real loss right now and reduce my profit? So my tax bill goes down. If later on it turns out those loans really are repaid, do I then owe back taxes because I didn't actually lose money? This is really interesting, I wonder why loan-loss provisions are treated like this. Maybe to discourage making bad loans on purpose to juice earnings or something.
  - CtrlAltT5wpm 4y ago
    I don't think you can claim a loss when the reduction in revenue is due to a reserve. But I'm not a tax lawyer, circumstances may vary, yadda yadda. Accrual of Reserves for Estimated Expenses Although reserves for contingent liabilities are often set up in business practice, amounts credited to reserves are generally not deductible for income tax purposes because the fact of liability is not fixed ( Portland Copper & Tank Works, Inc., CA-1, 65-2 ustc ¶9687). For example, advance deductions have been denied for additions to a reserve for expected cash discounts on outstanding receivables, amounts credited by a manufacturer to a reserve for possible future warranty service, and additions to a reserve covering estimated liability of a carrier for tort claims. However, to the extent that the Code specifically provides for a deduction for a reserve for estimated expenses, the economic performance rules ( ¶1540) do not apply ( Code Sec. 461(h)(5)). https://answerconnect.cch.com/contents-document/mtg012e61a3407b661000b229002264f3fce8016/accrual-of-reserves-for-estimated-expenses https://answerconnect.cch.com/contents-document/mtg012e61a34...
camillomiller 4y ago
1) hard to say 2) because it’s 9toMac, they are a low quality blog and their writers know absolutely nothing about business reporting. Also, the take is plainly wrong. The reason why Apple Card hasn’t expanded overseas is most likely that the rest of the Western world is not so deeply entrenched in a credit-debt system of personal financing like the US, so most of the other credit card markets are not really relevant enough for Apple to make an expensive move in internationalizing credit cards. In Europe, for example, you can’t pay many big expenses like your rent with a credit card, it’s all bank transfer based (which is why we have SEPA and modern zero-fee instant banking transfer technology now). Some eye-opening stats showing why Apple Card might never leave the US: https://www.spendesk.com/en-eu/blog/credit-card-statistics/ https://www.spendesk.com/en-eu/blog/credit-card-statistics/
- simfree 4y ago
  Paying rent with a credit or debit card is uncommon in the USA as credit carries a percentage surcharge and debit is a fee as well. ACH or check is coming for rent or mortgage payment.
  - kylehotchkiss 4y ago
    https://www.biltrewards.com/ https://www.biltrewards.com/ Don’t worry, there’s a credit card for that too
ksec 4y ago
They are paying Apple $350 to acquire every new Apple Card customer.

deleted 4y ago

[deleted]

fn-mote 4y ago

> The main cause of the losses is said to be from loan-loss provisions (when a bank sets aside money as an expense for future loans it expects won’t be repaid). That is, credit is being extended to people who will not pay it back, resulting in (at the moment presumably x% hypothetical) losses for the bank.

kaashif 4y ago
That's interesting. So if I set aside capital for loan losses, I get to claim that as a real loss right now and reduce my profit? So my tax bill goes down. If later on it turns out those loans really are repaid, do I then owe back taxes because I didn't actually lose money? This is really interesting, I wonder why loan-loss provisions are treated like this. Maybe to discourage making bad loans on purpose to juice earnings or something.
- CtrlAltT5wpm 4y ago
  I don't think you can claim a loss when the reduction in revenue is due to a reserve. But I'm not a tax lawyer, circumstances may vary, yadda yadda. Accrual of Reserves for Estimated Expenses Although reserves for contingent liabilities are often set up in business practice, amounts credited to reserves are generally not deductible for income tax purposes because the fact of liability is not fixed ( Portland Copper & Tank Works, Inc., CA-1, 65-2 ustc ¶9687). For example, advance deductions have been denied for additions to a reserve for expected cash discounts on outstanding receivables, amounts credited by a manufacturer to a reserve for possible future warranty service, and additions to a reserve covering estimated liability of a carrier for tort claims. However, to the extent that the Code specifically provides for a deduction for a reserve for estimated expenses, the economic performance rules ( ¶1540) do not apply ( Code Sec. 461(h)(5)). https://answerconnect.cch.com/contents-document/mtg012e61a3407b661000b229002264f3fce8016/accrual-of-reserves-for-estimated-expenses https://answerconnect.cch.com/contents-document/mtg012e61a34...

camillomiller 4y ago

1) hard to say 2) because it’s 9toMac, they are a low quality blog and their writers know absolutely nothing about business reporting. Also, the take is plainly wrong. The reason why Apple Card hasn’t expanded overseas is most likely that the rest of the Western world is not so deeply entrenched in a credit-debt system of personal financing like the US, so most of the other credit card markets are not really relevant enough for Apple to make an expensive move in internationalizing credit cards. In Europe, for example, you can’t pay many big expenses like your rent with a credit card, it’s all bank transfer based (which is why we have SEPA and modern zero-fee instant banking transfer technology now). Some eye-opening stats showing why Apple Card might never leave the US: https://www.spendesk.com/en-eu/blog/credit-card-statistics/ https://www.spendesk.com/en-eu/blog/credit-card-statistics/

simfree 4y ago
Paying rent with a credit or debit card is uncommon in the USA as credit carries a percentage surcharge and debit is a fee as well. ACH or check is coming for rent or mortgage payment.
- kylehotchkiss 4y ago
  https://www.biltrewards.com/ https://www.biltrewards.com/ Don’t worry, there’s a credit card for that too

ksec 4y ago

They are paying Apple $350 to acquire every new Apple Card customer.