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> Well, I just used it as collateral to borrow some cash from my buddy, which I'm told I need to inform you about. I'm suggesting that's the realization event.
by monocasa 3y ago
> Well, I just used it as collateral to borrow some cash from my buddy, which I'm told I need to inform you about.
I'm suggesting that's the realization event. That $50,000 is taxed as capital gains at that point. The subsequent loan value is immaterial to income calculations just like all other loans.
- Terr_ 3y agoThen it's not really about investments, but about loans becoming income, which would be a huge change.
- monocasa 3y agoThe loan itself is orthogonal. Using them as collateral would just reset basis to the value appraised with taxes due on the difference between that and the original basis, just like any other realization event. From a tax perspective it'd be like if you sold and immediately rebought the stock or whatever.