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Taxed on Unrealized Gains! What Are They Thinking?

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@cryptictruth
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During her confirmation hearing U.S. Treasury Secretary nominee Janet Yellen reportedly said she would consider taxing unrealized capital gains!

Let me tell you it's not a practical plan and could hurt sentiment among investor causing all sorts of Chaos in the financial markets. I hope this does does not happen as I can’t even figure out how the logistics behind this would even work.

Unrealized capital gains refer to the theoretical increase in value of assets that an investor holds onto. The gains are only realized when the investor sells the asset at a price higher than what was initially paid to buy it. To make investors pay tax on something that not only can lose value, but they might not even have the liquid funds to cover a tax” and “imaginary” gains at that point.

For example, you have $50,000 in bitcoin gains under this type of system you get taxed on that $50,000 even if you did not have the Fiat currency to cover that tax. The only thing that you could do at that point would be to sell that bitcoin and realize the gains. My next question would be are they going to tax those realized gains as well?

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In a second example, say you have $50,000 in bitcoin gains and you pay your tax on those gains. All the sudden those $50,000 gains get wiped out due to the market moving. Under The system would you be able to get a tax credit if you realize those gains considering you paid a tax on something that is no longer there?

The system boils down to the only way investors can avoid taxation is by not making any profit from their assets realized or unrealized.

Don’t even get me started and how this would work for 401(k)s considering most people would not be able to cover unrealized gains because there’s an in balance between people savings accounts and what they have in retirement accounts.

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