No, the idea is that if you have a stock or mutual fund share and it appreciates from $50 to $70, you’d have to count the $20 as capital gains and pay tax on it, even though that “gain” is only on paper and didn’t put any cash in your pocket, rather than figure out the gain when it’s sold and pay tax on the total gain then.
“No, the idea is that if you have a stock or mutual fund share and it appreciates from $50 to $70, you’d have to count the $20 as capital gains and pay tax on it, even though that “gain” is only on paper and didn’t put any cash in your pocket, rather than figure out the gain when it’s sold and pay tax on the total gain then.”
So if it appreciates from $50 to $70 you pay the unrealized capital gains, then it falls from $70 to $40 you probably do not get unrealized capital losses from these socialists. Nutsoid.
For investors who are building a retirement fund, the annual bookkeeping would be a total nightmare.
I have done accounting for over 63 years, & I wouldn’t even know where to start.
That's the key part; instead of paying the tax from profits with actual cash, you would have to finance the tax from other sources. Eventually, you could get to a point where you can't get loans to finance other stuff, because you have spent all of your credit on getting loans to pay taxes. And this would encourage selling off assets to pay the tax, but that works with stocks, not with real estate.
Your comment is what is mystifying about this whole issue.
the idea is that if you have a stock or mutual fund share and it appreciates from $50 to $70, you’d have to count the $20 as capital gains and pay tax on it, even though that “gain” is only on paper and didn’t put any cash in your pocket.
This is precisely how things are as we speak in the mutual fund world. It is especially noteworthy when there is a good year in the market like 2020. The gains warrant a large CASH position in order to pay the tax due. The following year it could all go to H E double sticks, but government has already fleeced the public of CASH that was only on paper, unrealized gain.