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Why not speculate at EOY and write the loss off on taxes?
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At the end of the year I will owe some money in taxes. Rather than simply pay it, I am considering making a wild bet (with options, for example), in a controlled way such that I can't lose more than I'll owe in taxes.
If I win the bet, I make a profit. If I lose, I simply write the loss off as capital gains losses, and pay my taxes that way.
Why is this a bad idea?
united-states taxes
asked 10 hours ago
horse hair
1,32921222
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up vote
2
down vote
favorite
At the end of the year I will owe some money in taxes. Rather than simply pay it, I am considering making a wild bet (with options, for example), in a controlled way such that I can't lose more than I'll owe in taxes.
If I win the bet, I make a profit. If I lose, I simply write the loss off as capital gains losses, and pay my taxes that way.
Why is this a bad idea?
united-states taxes
asked 10 hours ago
horse hair
1,32921222
add a comment |Â
up vote
2
down vote
favorite
up vote
2
down vote
favorite
At the end of the year I will owe some money in taxes. Rather than simply pay it, I am considering making a wild bet (with options, for example), in a controlled way such that I can't lose more than I'll owe in taxes.
If I win the bet, I make a profit. If I lose, I simply write the loss off as capital gains losses, and pay my taxes that way.
Why is this a bad idea?
united-states taxes
asked 10 hours ago
horse hair
1,32921222
At the end of the year I will owe some money in taxes. Rather than simply pay it, I am considering making a wild bet (with options, for example), in a controlled way such that I can't lose more than I'll owe in taxes.
If I win the bet, I make a profit. If I lose, I simply write the loss off as capital gains losses, and pay my taxes that way.
Why is this a bad idea?
united-states taxes
united-states taxes
asked 10 hours ago
horse hair
1,32921222
asked 10 hours ago
horse hair
1,32921222
asked 10 hours ago
horse hair
1,32921222
asked 10 hours ago
horse hair
1,32921222
asked 10 hours ago
horse hair
1,32921222
1,32921222
add a comment |Â
add a comment |Â
2 Answers
2
active
oldest
votes
up vote
10
down vote
Suppose your tax rate is 20%.
You have earned 5000 coins during the year and now owe 1000 coins in taxes.
Instead of paying the tax, you speculate using your 1000 coins -- but, alas, you lose all of it.
Assuming you can deduct that loss, your net income for the year is now 4000 coins.
You still owe 800 coins in taxes.
answered 9 hours ago
Henning Makholm
618512
add a comment |Â
up vote
1
down vote
If you incur a loss on your option play, it only reduces your income by the amount of your tax bracket.
Most investment decisions should not be made solely on the basis of taxation. Making a "wild bet" with options is one of them. As a wild bet, it most likely has a poor risk/reward spectrum and is a bad bet at any time of the year.
You could possibly defer taxes by taking a pairs position in highly correlated assets that are not substantially identical. For example, buying one gold stock and selling another.
If they move, at the end of the year, you cover the one that has the loss, deferring the gain until January 2nd. There is greater risk in doing this (the correlation breaks down). If you had a fundamental reason for the position then the taxation might be a secondary benefit. But again, this shouldn't be done based solely on taxation.
answered 17 mins ago
Bob Baerker
10.4k11440
add a comment |Â
2 Answers
2
active
oldest
votes
2 Answers
2
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
10
down vote
Suppose your tax rate is 20%.
You have earned 5000 coins during the year and now owe 1000 coins in taxes.
Instead of paying the tax, you speculate using your 1000 coins -- but, alas, you lose all of it.
Assuming you can deduct that loss, your net income for the year is now 4000 coins.
You still owe 800 coins in taxes.
answered 9 hours ago
Henning Makholm
618512
add a comment |Â
up vote
10
down vote
Suppose your tax rate is 20%.
You have earned 5000 coins during the year and now owe 1000 coins in taxes.
Instead of paying the tax, you speculate using your 1000 coins -- but, alas, you lose all of it.
Assuming you can deduct that loss, your net income for the year is now 4000 coins.
You still owe 800 coins in taxes.
answered 9 hours ago
Henning Makholm
618512
add a comment |Â
up vote
10
down vote
up vote
10
down vote
Suppose your tax rate is 20%.
You have earned 5000 coins during the year and now owe 1000 coins in taxes.
Instead of paying the tax, you speculate using your 1000 coins -- but, alas, you lose all of it.
Assuming you can deduct that loss, your net income for the year is now 4000 coins.
You still owe 800 coins in taxes.
answered 9 hours ago
Henning Makholm
618512
Suppose your tax rate is 20%.
You have earned 5000 coins during the year and now owe 1000 coins in taxes.
Instead of paying the tax, you speculate using your 1000 coins -- but, alas, you lose all of it.
Assuming you can deduct that loss, your net income for the year is now 4000 coins.
You still owe 800 coins in taxes.
answered 9 hours ago
Henning Makholm
618512
answered 9 hours ago
Henning Makholm
618512
answered 9 hours ago
Henning Makholm
618512
answered 9 hours ago
Henning Makholm
618512
618512
add a comment |Â
add a comment |Â
up vote
1
down vote
If you incur a loss on your option play, it only reduces your income by the amount of your tax bracket.
Most investment decisions should not be made solely on the basis of taxation. Making a "wild bet" with options is one of them. As a wild bet, it most likely has a poor risk/reward spectrum and is a bad bet at any time of the year.
You could possibly defer taxes by taking a pairs position in highly correlated assets that are not substantially identical. For example, buying one gold stock and selling another.
If they move, at the end of the year, you cover the one that has the loss, deferring the gain until January 2nd. There is greater risk in doing this (the correlation breaks down). If you had a fundamental reason for the position then the taxation might be a secondary benefit. But again, this shouldn't be done based solely on taxation.
answered 17 mins ago
Bob Baerker
10.4k11440
add a comment |Â
up vote
1
down vote
If you incur a loss on your option play, it only reduces your income by the amount of your tax bracket.
Most investment decisions should not be made solely on the basis of taxation. Making a "wild bet" with options is one of them. As a wild bet, it most likely has a poor risk/reward spectrum and is a bad bet at any time of the year.
You could possibly defer taxes by taking a pairs position in highly correlated assets that are not substantially identical. For example, buying one gold stock and selling another.
If they move, at the end of the year, you cover the one that has the loss, deferring the gain until January 2nd. There is greater risk in doing this (the correlation breaks down). If you had a fundamental reason for the position then the taxation might be a secondary benefit. But again, this shouldn't be done based solely on taxation.
answered 17 mins ago
Bob Baerker
10.4k11440
add a comment |Â
up vote
1
down vote
up vote
1
down vote
If you incur a loss on your option play, it only reduces your income by the amount of your tax bracket.
Most investment decisions should not be made solely on the basis of taxation. Making a "wild bet" with options is one of them. As a wild bet, it most likely has a poor risk/reward spectrum and is a bad bet at any time of the year.
You could possibly defer taxes by taking a pairs position in highly correlated assets that are not substantially identical. For example, buying one gold stock and selling another.
If they move, at the end of the year, you cover the one that has the loss, deferring the gain until January 2nd. There is greater risk in doing this (the correlation breaks down). If you had a fundamental reason for the position then the taxation might be a secondary benefit. But again, this shouldn't be done based solely on taxation.
answered 17 mins ago
Bob Baerker
10.4k11440
If you incur a loss on your option play, it only reduces your income by the amount of your tax bracket.
Most investment decisions should not be made solely on the basis of taxation. Making a "wild bet" with options is one of them. As a wild bet, it most likely has a poor risk/reward spectrum and is a bad bet at any time of the year.
You could possibly defer taxes by taking a pairs position in highly correlated assets that are not substantially identical. For example, buying one gold stock and selling another.
If they move, at the end of the year, you cover the one that has the loss, deferring the gain until January 2nd. There is greater risk in doing this (the correlation breaks down). If you had a fundamental reason for the position then the taxation might be a secondary benefit. But again, this shouldn't be done based solely on taxation.
answered 17 mins ago
Bob Baerker
10.4k11440
answered 17 mins ago
Bob Baerker
10.4k11440
answered 17 mins ago
Bob Baerker
10.4k11440
answered 17 mins ago
Bob Baerker
10.4k11440
10.4k11440
add a comment |Â
add a comment |Â
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