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There is definitely an obvious fix, just have collateralization be considered realization. You're welcome to have as much money on paper as you want, but if yo
by efsavage 2y ago
There is definitely an obvious fix, just have collateralization be considered realization. You're welcome to have as much money on paper as you want, but if you want to post $Xm in stock against a loan, you need to pay taxes on it first.
- hluska 2y agoWhat happens if the value of the underlying asset depreciates? Here’s a hypothetical: - I own $100 of stock in Company A. - The First International Bank of efsavage decides to accept that $100 in stock as collateral on a loan. So I pay taxes assuming a value of $100. - When I dispose of the stock, it is only worth $80. Will that be a retroactive credit, meaning that I will have to amend my tax return in the year that I collateralized those assets? Would it be a forward tax credit, meaning that I could apply that credit to future years? I worry about this both from a bookkeeping point of view (since this is potentially a lot of credits) but also worry the ways it could be manipulated.
- a_c_s 2y agoWhy would you earn a credit? You created a tax event and paid taxes on it and you got a loan for x% of $100. If you sell the stock at $80 you'd pay no taxes on the appreciation (-$20). No credits, investing is risky.
- hnaccount_rng 2y agoWhy not just treat it as any other loss for tax reasons? If I understand this correctly, then the current state is basically: If you take losses you can use those to nullify a future gain. Just do that. And.. the bookkeeping thing is really solvable. That's kind of what banks are for