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What 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 e
by hluska 2y ago
What 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